Coronavirus and Your Money

Biden Calls for $1,400 Third Stimulus Checks as Part of $1.9 Trillion Relief Package

Under President Biden's plan for a third stimulus check, families with older dependents would benefit, but payments could be "targeted" to the most in need.

A third stimulus check of $1,400 – that's what President Joe Biden is calling for in his $1.9 economic stimulus plan. This, when combined with the $600 second-round payments authorized last month, would bring the total post-CARES Act stimulus check relief to $2,000 per eligible person. (The CARES Act, which was enacted in March, provided first-round stimulus payments of $1,200.)

President Biden also wants to expand eligibility for the additional payments that, for the first two stimulus checks, only went to families with dependent children under age 17. Under the president's plan, the additional payments would also go to all dependents, regardless of age. This would include children over 16 years of age, college students age 23 or younger, and elderly parents living with their adult children. Under Biden's plan, Americans who can claim these people as dependents on their tax return would get an additional $1,400 per dependent tacked on to their third stimulus check.

A plan summary also states the third-round payments would also go to "all mixed status households." That presumably means that if one spouse qualifies for a payment but the other one doesn't (e.g., because he or she doesn't have a Social Security number), then the family would still be eligible for payments for qualifying members of the household.

The summary also stated that the Treasury Department would have the "flexibility and resources it needs to deliver stimulus checks to the families that need them most." That includes eligible families that still haven't received $1,200 payments under the CARES Act.

"Targeted" Third Stimulus Checks?

Biden may also "target" third-round stimulus checks to Americans with lower incomes. In December, the House of Representatives passed the CASH Act, which also would have provided a third round of $1,400 stimulus checks and expand the additional payment to all dependents. That bill, however, never got a vote in the Senate and died at the end of the previous Congressional term. The main objection for Senate Republicans was that CASH Act stimulus checks would have been sent to wealthy people who didn't need the money. Since then, a group of moderate Senate Republicans offered an alternative plan that would also have sent stimulus check only to people with lower incomes. Even some Democrats are pushing for payments to fewer Americans. For instance, Sen. Joe Manchin (D-W.Va.) suggested that he won't support a third round of stimulus checks unless payments are "targeted" and only sent to Americans who actually need them.

For first- and second-round payments, the total amount was reduced for people at certain income levels. Your payments were gradually reduced to zero if you're single, married filing a separate tax return, or a qualifying widow(er) with an adjusted gross income (AGI) above $75,000. If you're married (or a surviving spouse) and file a joint tax return, the amount of your first two stimulus checks dropped if your AGI surpassed $150,000. If you claim the head-of-household filing status on your tax return, your payments were reduced if your AGI topped $112,500. First- and second-round stimulus payments were reduced at a rate of $1 for every $20 over the applicable AGI threshold.

However, if President Biden wants to adjust the phase-out rules to make third-round stimulus checks more targeted, there are three easy ways to do this. First, create a bright line cut off for stimulus payments (i.e., no phase-out). In other words, if your income is below the cut-off threshold, you get the full amount. If your income is above the threshold, you get nothing. Second, 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, have the reduction begin with an AGI exceeding $100,000. The third way is to adjust the phase-out rate. For example, changing the rate to, say, $1 for every $10 over the threshold would reduce payments for people with higher incomes to zero faster.

The most likely targeting option for the Biden plan is to lower the threshold amounts (option #2 above). The tables below illustrate how this would change who gets a third stimulus check under the president's plan. The first set of tables show how much you would get – based on your filing status, AGI, and number of dependents – under Biden's plan (i.e., $1,400 base amount; $1,400 per dependent) if the same threshold amounts and phase-out rate used for the first two stimulus payments is applied (see above).

SINGLE PEOPLE ($75,000 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $75,000

$1,400

$2,800

$4,200

$5,600

$7,000

$8,400

$100,000

$150

$1,550

$2,950

$4,350

$5,750

$7,150

$125,000

$0

$300

$1,700

$3,100

$4,500

$5,900

$150,000

$0

$0

$450

$1,850

$3,250

$4,650

$175,000

$0

$0

$0

$600

$2,000

$3,400

$200,000

$0

$0

$0

$0

$750

$2,150

$225,000

$0

$0

$0

$0

$0

$900

$250,000

$0

$0

$0

$0

$0

$0

--

HEAD-OF-HOUSEHOLD FILERS ($112,500 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $112,500

$1,400

$2,800

$4,200

$5,600

$7,000

$8,400

$125,000

$775

$2,175

$3,575

$4,975

$6,375

$7,775

$150,000

$0

$925

$2,325

$3,725

$5,125

$6,525

$175,000

$0

$0

$1,075

$2,475

$3,875

$5,275

$200,000

$0

$0

$0

$1,225

$2,625

$4,025

$225,000

$0

$0

$0

$0

$1,375

$2,775

$250,000

$0

$0

$0

$0

$125

$1,525

$275,000

$0

$0

$0

$0

$0

$275

$300,000

$0

$0

$0

$0

$0

$0

--

MARRIED COUPLES FILING A JOINT RETURN ($150,000 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $150,000

$2,800

$4,200

$5,600

$7,000

$8,400

$9,800

$175,000

$1,550

$2,950

$4,350

$5,750

$7,150

$8,550

$200,000

$300

$1,700

$3,100

$4,500

$5,900

$7,300

$225,000

$0

$450

$1,850

$3,250

$4,650

$6,050

$250,000

$0

$0

$600

$2,000

$3,400

$4,800

$275,000

$0

$0

$0

$750

$2,150

$3,550

$300,000

$0

$0

$0

$0

$900

$2,300

$325,000

$0

$0

$0

$0

$0

$1,050

≥ $350,000

$0

$0

$0

$0

$0

$0

--

However, if the phase-out thresholds are lowered to $50,000 (singles), $75,000 (head-of-household filers) and $100,000 (joint filers), the next set of tables show how large your third stimulus check would be – based on your filing status, AGI, and number of dependents – under Biden's plan for payments with a $1,400 base amount plus an additional $1,400 per dependent (assuming the same phase-out rate used for first- and second-round payments is applied).

SINGLE PEOPLE ($50,000 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $50,000

$1,400

$2,800

$4,200

$5,600

$7,000

$8,400

$75,000

$150

$1,550

$2,950

$4,350

$5,750

$7,150

$100,000

$0

$300

$1,700

$3,100

$4,500

$5,900

$125,000

$0

$0

$450

$1,850

$3,250

$4,650

$150,000

$0

$0

$0

$600

$2,000

$3,400

$175,000

$0

$0

$0

$0

$750

$2,150

$200,000

$0

$0

$0

$0

$0

$900

≥ $225,000

$0

$0

$0

$0

$0

$0

--

HEAD-OF-HOUSEHOLD FILERS ($75,000 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $75,000

$1,400

$2,800

$4,200

$5,600

$7,000

$8,400

$100,000

$150

$1,550

$2,950

$4,350

$5,750

$7,150

$125,000

$0

$300

$1,700

$3,100

$4,500

$5,900

$150,000

$0

$0

$450

$1,850

$3,250

$4,650

$175,000

$0

$0

$0

$600

$2,000

$3,400

$200,000

$0

$0

$0

$0

$750

$2,150

$225,000

$0

$0

$0

$0

$0

$900

≥ $250,000

$0

$0

$0

$0

$0

$0

--

MARRIED COUPLES FILING A JOINT RETURN ($100,000 THRESHOLD)

 

NUMBER OF DEPENDENTS IN THE FAMILY

AGI

0

1

2

3

4

5

≤ $100,000

$2,800

$4,200

$5,600

$7,000

$8,400

$9,800

$125,000

$1,550

$2,950

$4,350

$5,750

$7,150

$8,550

$150,000

$0

$1,700

$3,100

$4,500

$5,900

$7,300

$175,000

$0

$450

$1,850

$3,250

$4,650

$6,050

$200,000

$0

$0

$600

$2,000

$3,400

$4,800

$225,000

$0

$0

$0

$750

$2,150

$3,550

$250,000

$0

$0

$0

$0

$900

$2,300

$275,000

$0

$0

$0

$0

$0

$1,050

≥ $300,000

$0

$0

$0

$0

$0

$0

Using these tables, you can see how this affects people with higher incomes. For example, a married couple with two child and an AGI of $200,000 would get a $3,100 stimulus check if the same phase-out threshold amounts used for the first two stimulus payments is applied. But if the lower threshold amounts are used, that same couple would only get $600.

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

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

The IRS has an online tool that lets you track the status of your stimulus checks.
February 19, 2021
The Current Plan for $1,400 Checks
Coronavirus and Your Money

The Current Plan for $1,400 Checks

Here's what you need to know about the stimulus check plan currently being considered in Congress for President Biden's COVID-relief package.
February 18, 2021
Want More Tax-Free Retirement Income? One Man’s Whole Life Decision
life insurance

Want More Tax-Free Retirement Income? One Man’s Whole Life Decision

Whole life insurance might not be something that’s on your retirement planning radar, but for this client, here’s how it served his need to control ta…
February 23, 2021

Recommended

33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
February 24, 2021
Taxes in Retirement: How All 50 States Tax Retirees
Tax Breaks

Taxes in Retirement: How All 50 States Tax Retirees

We rated every state, plus Washington, D.C. on how retirees are taxed. We considered taxes on Social Security and other retirement income, tax exempti…
February 23, 2021
Tax Day 2021: When's the Last Day to File Taxes?
tax deadline

Tax Day 2021: When's the Last Day to File Taxes?

Many people are wondering if Tax Day will be pushed back again this year because of the pandemic. Here's what we know so far.
February 23, 2021
Tax Tip: Reporting a 2020 RMD From an IRA That You Later Returned
Coronavirus and Your Money

Tax Tip: Reporting a 2020 RMD From an IRA That You Later Returned

If you paid back a "required minimum distribution" from an IRA last year, you still have to report the payout on your 2020 tax return.
February 23, 2021