Types Of Stimulus Checks in 2021
In 2021, the American government issued three rounds of stimulus checks to help alleviate the financial burden caused by the coronavirus pandemic. The stimulus checks, also known as Economic Impact Payments, were authorized by Congress and distributed by the Internal Revenue Service (IRS).
To be eligible for the stimulus checks, individuals had to meet certain criteria, such as having a Social Security number, filing taxes, and meeting income requirements. The amount of the stimulus payment varied based on income and family size. The IRS used various methods to distribute the payments, including direct deposit, paper checks, and debit cards.
Navigating the IRS tools and resources was crucial for individuals to determine their eligibility and track their payments. The IRS created an online tool called “Get My Payment” that allowed individuals to check the status of their payment and update their information. Additionally, the Recovery Rebate Credit allowed individuals who did not receive the full amount of the stimulus payment to claim the difference on their tax return.
Key Takeaways
- Eligibility criteria for stimulus checks included having a Social Security number, filing taxes, and meeting income requirements.
- Payment distribution methods included direct deposit, paper checks, and debit cards.
- Navigating IRS tools and resources, such as the “Get My Payment” tool and the Recovery Rebate Credit, was crucial for individuals to determine their eligibility and track their payments.
Eligibility Criteria for Stimulus Checks
To be eligible for a stimulus check in 2021, there are certain criteria that individuals must meet. The following subsections outline the income thresholds, dependency, and marital status requirements for receiving a stimulus check.
Income Thresholds
The income threshold for receiving a stimulus check in 2021 is based on the adjusted gross income (AGI) reported on an individual’s tax return. For single filers, the AGI must be below $75,000 to receive the full stimulus check amount, with a phase-out range up to $80,000. For married couples filing jointly, the AGI must be below $150,000 to receive the full stimulus check amount, with a phase-out range up to $160,000.
Dependency and Marital Status
Individuals who are claimed as a dependent on someone else’s tax return are not eligible to receive a stimulus check. Additionally, married couples who file separately are not eligible for a stimulus check. However, married couples filing jointly are eligible for a stimulus check, as long as they meet the income threshold requirements.
Qualifying children and dependents are also eligible for a stimulus check, as long as they have a valid social security number. Parents who added a child to their family in 2021 may also be eligible for a $1,400 payment. Head of household filers who had incomes between $112,500 and $120,000 in 2020 but had lower incomes in 2021 may be eligible for a 2021 Recovery Rebate Credit.
In summary, to receive a stimulus check in 2021, individuals must be a U.S. citizen or U.S. resident alien, have a valid social security number, meet the income threshold requirements, and not be claimed as a dependent on someone else’s tax return. Married couples filing jointly are eligible for a stimulus check as long as they meet the income threshold requirements.
Payment Distribution Methods
There are several ways in which the third round of stimulus checks were distributed to eligible Americans. These methods include direct deposit, paper checks and debit cards, and special considerations for federal beneficiaries.
Direct Deposit
For those who have previously provided the IRS with their bank account information for tax refunds or other purposes, the third stimulus payment was delivered via direct deposit. This method is often the quickest and most convenient way to receive the payment, as it is automatically deposited into the recipient’s bank account.
Paper Checks and Debit Cards
For those who did not receive their payment via direct deposit, the IRS mailed paper checks and debit cards to the address on file. The paper checks can be deposited into a bank account or cashed, while the debit cards can be used to withdraw cash or make purchases.
It is important to note that the debit cards are issued by MetaBank, which has caused confusion for some recipients who mistook the card for a scam or junk mail. However, the card is a legitimate form of payment and can be activated by following the instructions included with the card.
Special Considerations for Federal Beneficiaries
Federal beneficiaries, including Social Security, Railroad Retirement, and Veterans Affairs beneficiaries, who did not file a tax return in 2019 or 2020 were automatically sent their stimulus payment via the same method they receive their regular benefits. This means that those who receive their benefits via direct deposit received their stimulus payment via direct deposit, while those who receive paper checks received their stimulus payment via paper check.
It is worth noting that those who receive federal benefits and did file a tax return in 2019 or 2020 were also eligible for the third stimulus payment and received it in the same manner as other eligible Americans.
Overall, the distribution methods for the third round of stimulus payments aimed to provide a variety of options for recipients to receive their payment, including direct deposit, paper checks, and debit cards. The IRS also made special considerations for federal beneficiaries to ensure they received their payment in a timely and efficient manner.
Determining the Amount of Stimulus Payments
When it comes to determining the amount of stimulus payments, there are a few key factors that come into play. This section will cover those factors in detail, including how payment amounts are calculated and what options are available for those who may be eligible for reduced payments.
Calculating Payment Amount
The amount of stimulus payment that an individual receives depends on a number of factors, including their filing status, income level, and number of dependents. For those who are eligible, the payment amount is generally $1,400 per person, with an additional $1,400 for each dependent.
The income thresholds for stimulus payments are as follows:
- Single filers: $75,000
- Married filing jointly: $150,000
- Head of household: $112,500
For those who earn above these thresholds, the payment amount will be gradually phased out until it reaches zero.
Plus-Up Payments
In addition to the standard stimulus payments, some individuals may be eligible for what are known as “plus-up” payments. These payments are designed to provide additional financial relief to those who may have received reduced payments based on their 2019 tax returns, but whose 2020 returns show a lower income level.
To be eligible for a plus-up payment, an individual must have filed their 2020 tax return and have had their income level reduced below the threshold for the stimulus payment they received based on their 2019 return.
Reduced Payments
For those who earn above the income thresholds for stimulus payments, the payment amount will be gradually reduced until it reaches zero. This reduction is based on a formula that takes into account the individual’s income level and filing status.
Those who are eligible for reduced payments may still receive some financial relief, but the amount will be less than the standard $1,400 payment.
Overall, the amount of stimulus payment that an individual receives depends on a number of factors, including their income level, filing status, and number of dependents. By understanding how these factors come into play, individuals can better understand what to expect when it comes to receiving financial relief in the form of stimulus payments.
Recovery Measures and Additional Benefits
Recovery Rebate Credit
The Recovery Rebate Credit is a tax credit that was introduced in 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This credit provides eligible individuals with a one-time payment to help offset the financial impact of the COVID-19 pandemic. The American Rescue Plan Act (ARPA) of 2021 extended the Recovery Rebate Credit into the tax year 2021.
Individuals who did not receive the full amount of their Economic Impact Payment (EIP) in 2020 or 2021 may be eligible to claim the Recovery Rebate Credit on their 2021 tax return. Eligibility for the credit is based on a number of factors, including income level and filing status.
Child Tax Credit Adjustments
The ARPA also made significant changes to the Child Tax Credit (CTC) for the tax year 2021. The credit amount has been increased from $2,000 per child to $3,000 per child (or $3,600 per child under age 6). The credit is also now fully refundable, meaning that even families with no tax liability can receive the full amount of the credit.
In addition, the CTC is now being paid out in advance on a monthly basis, rather than as a lump sum on the tax return. This means that eligible families can receive up to $300 per child per month from July to December 2021. The CTC is available to families with a modified adjusted gross income (MAGI) of up to $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers.
Taxpayers should note that the changes to the CTC are only in effect for the tax year 2021, and will revert back to the previous amounts and rules in 2022 unless further legislation is passed.
Navigating IRS Tools and Resources
Taxpayers can use various IRS tools and resources to help them navigate the stimulus check process. Here are some of the most useful tools and resources:
Get My Payment Tool
The Get My Payment tool is an online tool that allows taxpayers to check the status of their stimulus payment. Taxpayers can use this tool to find out when their payment was sent, how it was sent, and how much they can expect to receive. To use the tool, taxpayers will need to provide some basic information, including their Social Security number, date of birth, and address.
Non-Filers and IRS Free File
The Non-Filers tool is an online tool designed for people who did not file a 2020 tax return and do not receive Social Security, Railroad Retirement, or Veterans Affairs benefits. This tool allows these individuals to provide the IRS with the necessary information to receive their stimulus payment. The IRS Free File program is also available to help taxpayers file their federal tax return for free. Taxpayers can use this program to file their tax return online and claim their stimulus payment.
Taxpayers should also consider creating an online account with the IRS. This will allow them to check the status of their stimulus payment, view their tax account information, and make payments online. Additionally, taxpayers should make sure that their tax filing status is up-to-date and accurate. If their filing status has changed since their last tax return, they may need to file an amended return to receive their stimulus payment.
Finally, the IRS has a Non-Filers portal that can be used by people who are not required to file a tax return. This portal allows these individuals to provide the IRS with their information so they can receive their stimulus payment. Taxpayers should be aware that they may be required to pay back their stimulus payment if they are later found to be ineligible.
