(TBEN Detroit) – A third stimulus check, worth $ 1,400, is part of the Biden administration’s $ 1.9 trillion relief package. The US bailout, in its original form, would also include more unemployment benefits, an improved child tax credit, and additional help for millions of Americans facing dire economic conditions caused by the COVID-19 pandemic. In progress. Details are currently being worked out. These decisions will determine how much money actually gets into people’s bank accounts.
Another relief payment in the near future is likely. President Joe Biden and politicians from both parties are backing giving Americans more money as soon as possible. While Republicans have questioned other aspects of the plan, Democrats control both houses of Congress and are ready to pass a straight-line vote stimulus bill. Budget reconciliation allows them to bypass systematic obstruction in the Senate and adopt stimulus measures by simple majority.
Why might your stimulation test decrease?
The $ 1,400 figure that has received so much attention seems destined to become a reality. But the actual amount that reaches people’s bank accounts could change depending on the income threshold, number of dependents, and other factors.
The idea of reducing the annual income requirement has gained momentum. In early February, Democratic Senator Joe Manchin of West Virginia and Republican Senator Susan Collins of Maine proposed an amendment to “target economic impact payments to Americans suffering from the effects of COVID-19, including provisions to ensure that high income taxpayers are ineligible. “
The previous two stimulus checks were phased out for people with Adjusted Gross Income (AGI) over $ 75,000 per year and married couples with AGI over $ 150,000. (The AGI is the total of your wages, interest, dividends, alimony, retirement distributions, and other sources of income less some deductions, such as interest on student loans, support payments, and pension contributions.) For every dollar of income over the threshold, the amount preceding two stimulus payments fell by 5%. Thus, the $ 1,200 CARES Act payment fell to $ 0 for incomes greater than $ 99,000 ($ 198,000), and the $ 600 of the second stimulus decreased to $ 0 for incomes greater than $ 87,000. $ ($ 174,000).
Late last week, Treasury Secretary Janet Yellen assured TBEN that Biden was looking to “make sure that [the next stimulus check is] targeted so that they reach those in need. You know, not to very high income people who don’t need it.
To that end, the Biden administration is considering lowering the income threshold to $ 50,000 ($ 100,000). Assuming the same five percent formula applied to the first two checks, a payment of $ 1,400 ($ 2,800) would actually be $ 700 ($ 1,400) with annual income of $ 64,000 ($ 128,000) and $ 0 with an annual income of $ 78,000 ($ 156,000).
The idea behind this type of change is to ensure that more money is spent in the economy at large rather than saved. According to a Federal Reserve Bank of New York survey, the average percentage of the first stimulus payment that a household spent on basic necessities declined as income increased. The average percentage of the first stimulus payment a household saved increased as income increased. While reducing the income limit would better target the economy, it would also reduce the number of people receiving a third stimulus check and the amount received by others.
Why your stimulation test might increase
Dependent children can also affect the size of your next stimulation test. The second stimulus check included $ 600 per dependent child. A dependent child was defined as a person under the age of 17 living in your household. There was no limit to the number of children. And for phase-out purposes, that $ 600 was added to the total for adults. For example, an adult who had two children would have received $ 1,800 in January if their AGI was less than $ 75,000. This amount would have decreased to $ 1,200 at an AGI of $ 87,000; $ 600 at an AGI of $ 99,000 and $ 0 at an AGI of $ 111,000.
The American Rescue Plan seeks to expand the pool of eligible dependents to include people over the age of 16. In this group, there would be students and older adults with certain types of disabilities. Such a change could make around 13.5 million more people eligible to receive stimulus checks.
The amount of a third stimulus check could also be affected by a recipient’s taxes. To expedite distribution, the Internal Revenue Service used the most recent tax returns to determine the AGI and, therefore, eligibility. The AGI changes from year to year, as people receive raises, change jobs, or become unemployed. The first relief payment was passed in March 2020. By that time, some people had filed their 2019 taxes and others had not. The amount of the check could therefore have been based on the 2018 or 2019 taxes. The second relief payment went into effect in December 2020, after almost everyone had filed their 2019 taxes. This amount was therefore determined by 2019 tax returns.
When can you receive your incentive check?
The third relief payment could be signed in early or mid-March 2021. By then some people will have filed taxes for 2020. Others will not. This means that a third payment could be based on 2019 or 2020 taxes. The past year has been marked by high unemployment, which often hurts household finances. Many others have seen their hours reduced. If his AGI changes significantly from one tax return to another, the amount of his next stimulus check could also change.
When could that third stimulus check happen? The administration’s goal is to sign the American Rescue Plan by March 14. This is also when the current federal unemployment premium of $ 300 expires. Assuming President Biden was able to sign the relief package on March 14, direct deposits would likely begin the week of March 22, with checks starting to arrive the week of March 29.
But the House appears poised to pass the US bailout this week. House Speaker Nancy Pelosi recently reiterated her more aggressive schedule, saying the bill could be passed by the end of February. The Senate could then adopt it next week by a direct vote online. This assumes, of course, that Democrats can quickly sort out their differences from the $ 15 minimum wage. If so, the stimulus package could pass through Congress before March 5 and be enacted on March 8. Direct deposits would start arriving in bank accounts on March 15, and checks would start mailing out on March 22. Both deadlines could be extended. for a number of reasons.
Why are stimulation checks always necessary?
The economy shrank 3.5% in 2020, the biggest drop in a single year since the end of World War II. Weekly unemployment figures remain historically high, with 861,000 people applying for unemployment insurance for the first time last week. Another 516,000 people have requested assistance in the event of an unemployment pandemic. (A typical week before the pandemic saw about 250,000 new jobless claims.) At the end of January, about 18 million people were receiving unemployment benefits in one form or another. That’s one in nine workers. While the official unemployment rate is 6.3%, the actual rate is probably closer to 10%, considering all the people who have dropped out of the workforce.
An economic rebound depends on the widespread release of a COVID vaccine. But efforts to vaccinate the public have gone a bit slowly. Shortages and winter conditions have forced some areas to temporarily close vaccination centers and reduce vaccine delivery in recent weeks. Many of those who qualify have encountered problems making an appointment. On the bright side, the federal government began distributing the vaccine to some pharmacies earlier this month. And Dr Anthony Fauci, the country’s leading infectious disease specialist, believes vaccination will be open to everyone by July, when demand no longer exceeds supply. But mask-wearing and a general lack of normality could continue until 2022. Currently, COVID cases nationwide exceed 28 million, while deaths approach 500,000.
Originally posted at 2:46 p.m. ET on Thursday, February 11, 2021.