Stimulus checks: Every important thing you should know

Tax season has started — the IRS’ busy time of the year. But Congress is adding to the agency’s burden, requiring it to not just process regular federal tax filings but also work through rebate claims on this year’s tax forms for missing stimulus check payments. And if that’s not enough, if Congress approves President Joe Biden’s $1.9 trillion COVID-relief bill by mid-March, the IRS will be charged with sending out a third round of stimulus checks shortly after Biden signs the bill into law. (Here’s how a third check during tax time could affect you, even if the IRS delays when you need to file this year.)

House Speaker Nancy Pelosi confirmed on Feb. 18 that the House will bring the bill a vote by the end of next week, so it can send the package to the Senate and then to Biden to sign before March 14, when federal unemployment benefits are set to expire. To speed the bill through Congress, Democrats are using a legislative tool called budget reconciliation that would remove barriers that Republicans could use to slow down a vote. By fast-tracking the legislation, the IRS could start sending third stimulus payments out as soon as the third week in March, if Congressional Democrats are able to keep to their schedule.

While Congress is working out the details for a $1,400 stimulus check over the next month, however, millions of Americans are still waiting for money from the first or second payments approved in 2020 — we explain how to claim that missing money as a tax credit. We also tell you what you need to know about how some rules have changed (around garnishment, for example) and when it’s time to file a payment trace for your missing money. Below, we’ve broken down the most important stimulus check facts right now. This story is frequently updated with the latest information. 

Congress is moving forward with Biden’s plan for $1,400 checks, with changes to income limits

Biden hasn’t wavered from his promise to send $1,400 checks, since first announcing  his plan for a third round of payments in his American Rescue Plan in January. What has been open to debate, however, is who would qualify for the third stimulus payment.

A group of moderate Senate Republicans in January lobbied Biden to reduce the check amount and significantly lower the income cap required to qualify for a payment. While Biden rejected the proposal — saying “Congress must respond boldly and urgently” — the Republican pitch kicked off a discussion on “targeting” the next round of payments to exclude higher earners from receiving money.

After some back and forth in Congress on whether to lower the income limits to target payments, House Democrats settled on a plan that would follow the income-requirement outlines used for the first two checks but set an upper cap to cut off payments to higher earners. Under the current House Democrats’ plan (PDF), individuals with an AGI (or adjusted gross income) of $100,000 a year would be excluded from receiving a payment. Heads of household earning $150,000 a year and couples earning $200,000 would also be above the upper limit to qualify for any money.  

See our calculator for the third stimulus check to get an estimate for how you and your family would do under the plan.

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Stimulus check No. 3: What you need to know

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Here’s how Democrats will speed approval of the third checks through Congress 

Using a powerful, little-used legislative tool called budget reconciliation, Congressional Democrats hope to speed through approval of Biden’s rescue bill. The reconciliation process comes with strict requirements for what can and can’t be included in the bill. For example, House and Senate Democrats are working through whether they can include a hike to the minimum wage as part of the bill.

Tax season 2020 is important for stimulus checks, even if you don’t usually have to file

Tax-filing season this year carries an extra load for those who qualify for the first, second or potentially third stimulus checks — and that’s whether you are required to file taxes or not. The IRS uses the federal tax system to decide things like how much money you should get in your stimulus checks (based on your AGI), how quickly it can send your next payment and even if you should get a catch-up payment (it’ll be faster if you set up direct deposit with the IRS and do your taxes soon).

The third payment looks like it could be based on either your 2019 or 2020 tax filing, which may complicate the situation for some.

If your first or second payment haven’t arrived or if any amount is missing, the IRS will also use your 2020 taxes to reconcile the difference — but only if you file for a Recovery Rebate Credit as part of a tax return. Again, that even applies to non-filers, people who aren’t typically required to file income tax. Here’s our primer on everything stimulus check and taxes and some of the rules and exceptions you should know about.

One more thing: If you got a letter from the IRS saying the money was sent, but you never got your funds, you may need to set up a payment trace rather than use the IRS’ rebate credit.

A third stimulus check could get sent out faster than the first two did

It took nine months to get from the signing of the CARES Act (March 27, 2020) to the December stimulus bill (Dec. 27, 2020). Even before taking office, Biden has pushed for Congress to pass another COVID-19 relief package quickly — one that includes a third stimulus check for up to $1,400.

If as Pelosi plans, Biden signs the bill by March 14, payments could be sent out to bank accounts — within days — now that the IRS has a system in place after handling the first and second checks. Here’s the current stimulus check timeline as we know it now.

More people may qualify for a third stimulus check — but fewer could, too

With the Biden administration, House Democrats are looking to expand who qualifies for a check and include at last two groups left out of the first payments: dependents of any age and families with mixed-status citizenship (that means some members are not US citizens).

But legislators could decide to exclude some who may have qualified for a payment with the first two checks. Congress has settled on the third stimulus check coming with a per-person maximum of $1,400. But they are looking at setting a cap on the upper income limit to qualify for a payment, which would mean some in the upper-income category may not receive any money at all, for themselves or their dependents.

If you are curious, here are the details of the mathematical formula Congress is looking at to set payments.

Your stimulus check rights improved with the second round — but there are exceptions

Usually, stimulus dollars are yours to spend or save as you please. You can’t be compelled to spend your proceeds on rent, car payments, back taxes or debt — or even unpaid child support. But the second check that went out in January changed some of the rules.

The government’s Taxpayer Advocate Service, which works with the IRS, has pointed out that anyone claiming a Recovery Rebate Credit for catch-up stimulus money is not automatically protected from garnishment.

It isn’t clear how a third check would play into the mix. And there is still an exception that allows at least one entity to garnish your stimulus money. Make sure you know your stimulus check rights.

Stimulus check rules and exceptions can get complicated

With stimulus checks, the small details and exceptions can be dizzying. While some situations are easy to decipher, others concerning you and your dependents might make it unclear if you’re eligible, how much money you may receive and if there’s anything extra you have to do to claim your money.

For example: