On March 11, 2021, Congress signed The American Rescue Plan, the latest COVID relief bill. Among other provisions, the bill provides another stimulus payment, or Economic Impact Payment, to qualifying taxpayers to help mitigate COVID-induced financial distress.

Qualifying taxpayers will receive up to $1,400 — plus an additional $1,400 per qualifying dependent. For example, a qualifying taxpayer with two children will receive three $1,400 payments for a grand total of $4,200.

For many, this payment can be a lifeline in a turbulent time. Needless to say, many taxpayers are anxiously awaiting their third payment. Here are five things you need to know about the most recent stimulus:

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  • Eligibility requirements differ from the first two payments.

Families earning less than $150,000 per year and individuals earning less than $75,000 per year are eligible for the full payment. The payment amount will be decreased proportionately to additional income until the $160,000 per year mark for families and the $80,000 per year mark for individuals, where it phases out completely.

Unlike the previous two rounds, all dependents qualify for additional payments. This includes adult dependents and college students.

 

  • You don’t need to do anything to receive your stimulus check.

The IRS will determine eligibility based on the most recent tax return on file, be it 2019 or 2020. They will subsequently deposit the payment in the bank account they have on file from the relevant tax return.

 

  • Payments are already being sent out.

The IRS is already distributing stimulus payments. Qualifying taxpayers started receiving payments around March 14. If you want to know exactly when you will receive your payment, use the IRS Get My Payment Tool.

 

  • The check will be deposited in the account listed on your latest tax return.

As previously mentioned, the IRS will use your most recent tax information on file to deposit the check. Right now, there is no way to change your information for your stimulus check in the meantime.

 

  • The stimulus checks aren’t considered regular income.

None of the three stimulus checks are considered regular income; they cannot be taxed like regular income as a result. They won’t affect your tax return in the future, nor your eligibility for any federal government assistance or benefits.

What does the third stimulus payment mean for taxpayers?

Congress remains hopeful that the vaccination effort will be enough to finally see the pandemic through. If this is the case, taxpayers can expect the third stimulus to be the last.

Due to the unprecedented financial calamity caused by the pandemic, Congress has aggressively pursued relief for American taxpayers and businesses to the tune of trillions of dollars. Among the relief provisions are tax credits, Paycheck Protection Program loans, the Employee Retention Credit, and, of course, the three stimulus payments.

Proactively avoiding tax mistakes can help save your future self from the inevitable IRS headache. And if you do find yourself owing the IRS, just know that you don’t have to face them alone. With thousands of clients helped and an A+ rating from the Better Business Bureau, you can trust the experts at Community Tax to handle your tax situation, whatever it may be.

If you need tax help, register for a free tax consultation today.