The third round of stimulus checks have been finalized and the Treasury is waiting for the final details to begin sending payments. The biggest change with this round of stimulus payments is not the income level that one has be beneath to receive the full $1,400 dollars but, rather the threshold amount. The prior two stimulus payments received by taxpayers required taxpayers to have an AGI of $75,000 or less to receive the full amount and a ceiling of $99,000 dollars. The amount of stimulus was reduced by $50 dollars for every $1,000 over $75,000 for single taxpayers and $150,000 for married filing jointly.
The third round of stimulus checks have the same requirements for receiving the maximum amount of $1,400 with income below $75,000 but the phase out has been lowered. The third round of stimulus checks will be reduced by $56 dollars for every $1,000 over $75,000 and will completely be phased out at $87,000 dollars for single tax filers and $174,000 rather than $198,000 in the previous two rounds for married filing jointly.
This will come as a relief to people that had been worried that the income threshold to receive the maximum allowable amount was to be lowered to $50,000 for single tax filers and $100,000 for joint tax filers; but congress and senate were able to reach a middle ground and have a lowered phase out threshold. As these income levels were based on 2019 tax return and not the economic climate in 2020 or currently.
The good news is that if you did not receive the stimulus payments due to your prior year tax return had a higher income reported as it might have been a spouse losing employment or retirement Inform your tax preparer if you have not received the stimulus payments and they may elect for your if you qualify based on your 2020 earnings to receive the tax credit.
K & S Law Group located in Newport Beach is a full-service tax law firm providing audit representation for individuals and entities, tax consultation and compliance, international tax consultation and compliance, tax preparation services in Orange County and throughout California.