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  • Coronavirus and Your Money
Coronavirus and Your Money

How a Third Stimulus Check Could Differ From the First and Second Payments

There's a big push in Washington for a third round of stimulus payments. But the amount and eligibility rules for your third stimulus check could be different than for earlier payments.

by: Rocky Mengle
January 27, 2021
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There's no guarantee, but a third stimulus check certainly appears to be on the horizon. Many people thought the second-round $600 checks were too little, too late. As a result, the push for a third round of payments began before the law authorizing the second-round payments was even signed into law. And now that Democrats control both chambers of Congress and the White House, a third stimulus check almost seems inevitable.

But there are a lot of open questions about third stimulus checks. For instance, President Biden wants your next stimulus check to be for $1,400, but progressives in Congress haven't given up on $2,000 checks. And how much will you get for your kids? Who will qualify? How will they be calculated? These are just some of the questions that will need to be answered as Congressional Democrats and the president hammer out an agreement that can withstand any Republican opposition.

  • Third Stimulus Check Update: When Could We Get Another Stimulus Check?

In the end, the next round of stimulus checks could look a lot different than the first two rounds. But while we wait for word from Washington, let's examine a few ways your third stimulus check could differ from the first- and second-round payments. Depending on which way Congress and the new president go, your next stimulus check could be much higher, or much lower, than what you got before.

1 of 11

Larger Base Amount for Third Stimulus Checks

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The base amount of first-round stimulus checks under the CARES Act was $1,200 (i.e., the amount paid before adding the extra payment for children or applying the phase-out rules). That amount was cut down to $600 for second-round payments under the COVID-Related Tax Relief Act. But the base amount will probably be something different for third-round stimulus payments – although it's still likely to be higher than either the first- or second-round payments.

As we already mentioned, President Biden is talking about $1,400 checks. So, there's a strong possibility that that will be the eventual base amount for third-round payments. The $1,400 figure came about because many Americans thought the $600 second-round checks were insufficient and that $2,000 was a better amount. However, not every lawmaker was willing to go that far and support an additional round of $2,000 stimulus checks. So, instead, the idea of authorizing a combined total equaling $2,000 was born ($600 second-round checks + $1,400 third-round checks = $2,000). In fact, the House even passed a bill in December – the CASH Act – that would have done just that, although it was blocked by Republicans in the Senate and never became law.

  • Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

While the smart money is on $1,400 checks, there's still an outside chance the base amount for third-round payments will end up being $2,000. Progressives latched on to the $2,000 amount last summer and many of them haven't let go. For example, Rep. Alexandria Ocasio-Cortez (D-N.Y.), Sen. Ed Markey (D-Mass.), Rep. Cori Bush (D-Mo.), Rep. Ayanna Pressley (D-Mass.) and other progressives continue to call for $2,000 checks even after President Biden came out in favor of $1,400 payments. The odds of the progressive wing of the Democratic Party prevailing on this question are rather slim…but stranger things have happened.

2 of 11

Families Could Get More Money in Their Third Stimulus Check

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For first-round stimulus payments, families received an extra $500 for each dependent child age 16 or younger. That amount was increased to $600 for second-round payments. (The extra payments were in addition to the base amount of $1,200 or $600, respectively.) There's a good chance the additional amount will be something other than $500 or $600 for a third stimulus check.

The CASH Act, which the House passed in December, would have increased the second-round extra payment from $600 to $2,000 per eligible child. It would have done this by authorizing a separate $1,400 payment per child. The HEROES Act, which was passed by the House back in May, would have upped the extra amount to $1,200 per dependent. While we don't think the extra payment for third-round payments will go as high as $2,000, the CASH Act and HEROES Act show that some lawmakers are willing to give more to families with kids.

  • 12 Ways the Biden Stimulus Package Could Put (or Keep) Money in Your Pocket

If the extra payments for third-round payments creeps up too high, there's also a chance that the additional amount will be capped. For instance, the HEROES Act would only have allowed extra payments for your first three children. This is a way to keep the cost of a third-round payment down, but larger families would be penalized.

3 of 11

More Families Could Get an Extra Amount in Their Third Stimulus Check

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For both the first- and second-round stimulus payments, families received an additional $500 or $600, respectively, for each dependent child age 16 or younger (see above). However, families with older children, including college students age 23 or younger, or with elderly parents living with them, got nothing. Zero. Zip. Zilch. That could very well change with third-round stimulus checks.

Several of the bills moving through Congress since the CARES Act dumped the age limitation for dependents. Under the HEROES Act, HEALS Act (which Senate Republicans backed last summer), and the CASH Act, extra payments would have been allowed for anyone you could claim as a dependent on your tax return – regardless of their age.

  • Who's Not Getting a Second Stimulus Check (Not Everyone is Eligible!)

Expanding eligibility for the additional payments could be costly, though. So, like potential increases to the extra payment amount, giving additional payments to more families could also come with a limit on the number of dependents who are eligible for the extra amount. For example, you might only get an additional payment for the first three dependents in your family.

4 of 11

Fewer People Could Qualify for a Third Stimulus Check

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Wealthier Americans didn't get a first- or second-round stimulus check. That's because payments were gradually decrease to zero if you're single, married filing a separate tax return, or a qualifying widow(er) and had an adjusted gross income (AGI) on your 2019 tax return above $75,000. Married couples filing a joint return started to see their stimulus check shrink if their AGI exceeded $150,000. For people who claimed the head-of-household filing status, payments were reduced if your AGI topped $112,500.

However, that still means a lot of families with higher incomes – and who may not have suffered financially during the pandemic – still received something. That's especially true for families with children. For example, a family of five with a 2019 AGI up to $228,000 still got a first-round stimulus check (although it would be a small one). For the second-round payments, a family of five got a check as long as their 2019 AGI didn't exceed $210,000.

But when the CASH Act was up for debate in the Senate, the Republicans' main objection was that stimulus checks would be sent to wealthy people who didn't need the money if the bill passed. More recently, a bipartisan group of lawmakers led by Sen. Joe Manchin (D-W.Va.) suggested they won't support a third round of stimulus checks unless payments are "targeted" and only sent to Americans who actually need them. To satisfy these concerns, the phase-out rules could be adjusted for third-round payments so that fewer people with higher incomes receive a check – and the Biden administration is apparently willing to consider this type of change.

  • 6 Reasons Why Your Second Stimulus Check Might Be Delayed

There are two easy ways to make third-round stimulus check more targeted. First, the phase-out threshold amounts could be lowered. For instance, instead of having payments for married couples drop if their AGI is over $150,000, having the reduction begin with an AGI exceeding $100,000. The second way is to adjust the phase-out rate. First- and second-round stimulus payments were reduced at a rate of $1 for every $20 over the applicable AGI threshold. If the rate were changed to, say, $1 for every $10 over the threshold, then payments for people with higher incomes could be reduced to zero faster.

5 of 11

Number of Payments Could Be Increased

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Both stimulus checks sent so far have been one-time payments. The HEROES Act, HEALS Act, and CASH Act also called for single payments. However, because the bills keep coming every month, some lawmakers have pushed for monthly stimulus payments for the duration of the pandemic. For example, one bill introduced last year by Rep. Ro Khanna (D-CA) and Rep. Tim Ryan (D-OH) would have given every qualifying American over the age of 16 a stimulus payment of up to $2,000 each month for up to a year (plus $500 for up to three children).

The odds of Congress authorizing monthly payments are very slim – but not entirely out of the question. The idea is popular among progressive. For instance, a recent survey by Data for Progress showed support for monthly $2,000 stimulus payments among 65% of the people polled. Andrew Yang's nonprofit advocacy group, Humanity Forward, is pushing for monthly payments, too. If there's enough pressure put on lawmakers, we might see some movement in this direction. Again, it's not likely, but it's not impossible, either.

  • Second Stimulus Check Calculator

6 of 11

Third Stimulus Checks Could Be Based on 2020 Tax Returns

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First-round stimulus checks were based on either your 2018 or 2019 tax return, whichever was most recently filed when the IRS began processing your return. If you didn't file a return for either of those two years, you could send the IRS the necessary information through an online portal. If you received benefits from the Social Security Administration, Railroad Retirement Board, or Department of Veterans Affairs, the IRS got the information it needed from those other government agencies. If the IRS didn't get your information at all, you have to claim the amount due as a "recovery rebate" credit on your 2020 federal tax return (Form 1040).

Second stimulus checks are based on your 2019 return. If you didn't file a return, you didn't use the non-filers portal to get your first-round payment, and you don't receive government benefits, then you'll have to claim the "recovery rebate" credit on your 2020 return to get your money. The IRS is not using the non-filer portal for second stimulus payments.

The IRS will begin accepting 2020 tax returns on February 12. Since third-round stimulus checks probably won't be delivered before then, your third-round payment could very well be based on your 2020 tax return, if it has already been file, or on your 2019 return if you haven't filed your 2020 return when the IRS is ready to send your payment.

  • The Recovery Rebate Credit: Get Your Full Stimulus Check Payment With This Tax Credit

As with first-round payments, this would create some opportunities to "game" the system if you don't file your 2020 return early. For instance, if you'll get a larger check based on your 2020 tax return, than you might be able to quickly file your 2020 return electronically and have your third stimulus check based on that return. If you'll get a bigger check if it's based on your 2019 return, then just wait until after your payment is processed to file your 2020 return.

7 of 11

You Might Not Need a Social Security Number to Get a Third Stimulus Check

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If you don't have a Social Security number, you didn't qualify for a first-round stimulus check under the CARES Act. In fact, if you're married, the CARES Act said that both you and your spouse must have a Social Security number to get a first-round payment. You also couldn't get an extra $500-per-qualifying-child tacked on to your first stimulus check if both parents didn't have a Social Security number.

These rules were loosened by the COVID-Related Tax Relief Act. For second-round payments, you can get a second stimulus check if you have a Social Security number, but your spouse doesn't. You also qualify for the additional $600-per-qualifying-child payment with your second stimulus check if you have a Social Security number, but your spouse doesn't. Plus, the COVID relief law also made the new rule applicable to first-round payments, too. So, if one spouse has a Social Security number and the other one doesn't, they can claim up to $1,200, plus an additional $500 for each qualifying child, as a "recovery rebate" credit on their 2020 tax return if they were denied a first-round payment because they both didn't have a Social Security number.

  • Your Second Stimulus Check: How Much? When? And Other FAQs

As for third-round payments, there's a chance the Social Security requirement could be removed all together. This is what the HEROES Act would have done. Under that bill, you would have only needed a Taxpayer Identification Number (TIN) to get a second-round payment. However, this would be a controversial move, since it would allow certain people who are not U.S. citizens and who can't get a Social Security Number to receive a stimulus payment. It's a possibility, though, now that Democrats will soon control the White House, the House of Representatives, and the Senate.

8 of 11

Child Support May (or May Not) Be Taken From Third Stimulus Checks

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If you were behind on child support payments when first-round stimulus checks were being sent, the IRS could have taken your stimulus money and given it to the person you owed. As it turns out, the IRS went a bit too far and ended up taking stimulus payments from about 50,000 spouses of people who owed child support to a third person. They paid that money back, though.

Congress reversed course for the second round of stimulus checks. Under the COVID-Related Tax Relief Act, the IRS can't take second-round payments to pay overdue child support. While this certainly helps people behind on their payments, it hurts people who are not getting the child support they're owed.

  • Will College Students Get a Second Stimulus Check? (Hint: It Depends!)

This creates a dilemma for lawmakers crafting legislation for third-round stimulus payments. Who should be protected – the person who owes child support or the person who needs it? It's not hard to imagine Congress reversing course again and adopting the approach taken in the first round for third stimulus checks. If that's what they do, third-round stimulus payment will be subject to garnishment to pay child support arrears.

9 of 11

Dead People Could Receive a Third Stimulus Check

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The CARES Act didn't say anything about whether deceased people should or shouldn't receive a stimulus check. Lawmakers probably just didn't think about it. As a result, as the IRS was rushing to delivery payments as soon as possible, over 1 million first-round stimulus checks were sent to people who were dead. The IRS later asked for the money back, but it's not clear how many family members actually followed the tax agency's instructions and sent the money back.

When it came time to draft the COVID-Related Tax Relief Act, Congress was a little more careful. They included a provision in the new law that specifically says that anyone who died before January 1, 2020, is not eligible to receive a second stimulus check. In addition, the IRS is was granted access to the Social Security Administration's "death master file," which should cut down on the number of second-round stimulus checks inadvertently sent to people who are no longer with us.

  • What to Do If Your Stimulus Check is Lost, Stolen or Destroyed

For third-round payments, it's probably safe to say that payments to deceased people will be addressed in the law. However, the date of death defining eligibility could be changed from January 1, 2020, to January 1, 2021. If that's the case, people who died in 2020 would get a third-round payment, even though they weren't eligible for earlier stimulus checks.

10 of 11

Earlier Payments Could Be Retroactively Increased

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It's worth mentioning that the law authorizing a third stimulus check could also retroactively increase or expand eligibility for first- and second-round payments. There is precedent for this. As mentioned earlier, the COVID-Related Tax Relief Act, which authorized the second round of stimulus checks, changed the first-round eligibility rules for married couples that only had one Social Security number between them. The HEROES Act was chock full of retroactive provisions. That bill would have changed the first-round rules regarding extra payments for dependents, the Social Security number requirement, and garnishment. The CASH Act would have retroactively amended the amount of second-round payments, too.

Congress might want to go back and change a few other rules now for first- and second-round payments. Who knows what types of retroactive changes lawmakers might cook up, but don't be surprised to see a few of these provisions in a new law.

  • Is Your Stimulus Check Taxable?

11 of 11

Stay on Top of Stimulus Check Developments

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Follow Kiplinger for the latest news and insights on federal stimulus payments (and other important personal-finance matters). Stay with us on:

  • email. Sign up free for our daily Kiplinger Today e-newsletter.
  • social media. Follow us on Instagram, Twitter and Facebook.
  • podcasts. Subscribe free to our weekly Your Money's Worth podcast. Apple | Google Podcasts | Spotify | Overcast 

See some of our other coverage of the second stimulus check:

  • Third Stimulus Check Update: When Could We Get Another Stimulus Check
  • Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
  • 6 Reasons Why Your Second Stimulus Check Might Be Delayed
  • The Recovery Rebate Credit: Get Your Full Stimulus Check Payment With This Tax Credit
  • What to Do If Your Stimulus Check is Lost, Stolen or Destroyed
  • Who's Not Getting a Second Stimulus Check (Not Everyone is Eligible!)
  • Will College Students Get a Second Stimulus Check? (Hint: It Depends!)
  • Coronavirus and Your Money
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