This is a developing story. We’ll continue to update the article as soon as more information is available.
- Has the Third Stimulus Check Been Approved?
- How Much Is the Third Stimulus Check?
- What Is the Timeline for the Third Stimulus Check?
- Who Is Eligible for the Third Stimulus Check?
- How Will You Receive the Third Stimulus Check?
- Will You Have to Pay Back Money From a Previous Stimulus Check?
- What Should You Do With Your Third Stimulus Check?
- What Else Is Included in Biden’s Stimulus Package?
Just as most Americans received their $600 second stimulus checks from the U.S. Treasury in early January, then President-elect Joe Biden unveiled his $1.9 trillion American Rescue Plan that includes—you guessed it—a third stimulus payment. Now that President Biden has officially been sworn into office, should you start checking your account for a third check?
Has the Third Stimulus Check Been Approved?
Not yet. The Senate approved a budget resolution that clears the way for Biden’s COVID-19 relief plan to be passed as a reconciliation measure.1 Reconciliation is a faster way to move certain tax, spending and debt-limiting legislation through the approval process.2
The bill has also been approved by the House of Representatives and they are working on the details of the legislation.3 Leaders there say they want to move it through within a couple of weeks so it can go into effect before some supplemental benefits expire mid-March.4
How Much Is the Third Stimulus Check?
Biden has proposed a $1,400-per-person ($2,800-per-couple) direct payment for this third round of stimulus checks. This payment would top off the $600 payment most eligible folks have already received as part of a previous COVID-19 relief package Congress passed at the end of December for a total of $2,000 in stimulus payments per person.
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The stimulus payments are one part of Biden’s much larger COVID-19 relief plan that also expands certain income tax credits, extends unemployment benefits for people who have lost their jobs during the COVID-19 pandemic, and provides more aid for renters and landlords.5 Yep, it’s a mouthful. We’ll take a closer look at what else is included later.
What Is the Timeline for the Third Stimulus Check?
With Congressional leaders aiming to move the bill through all its hoops so it can take effect by mid-March, eligible recipients could start seeing their stimulus payments by then as well. The IRS and U.S. Treasury have been quick to deliver past stimulus checks, with December’s payments reaching most folks by direct deposit within a week of then-President Donald Trump signing the legislation.6
Who Is Eligible for the Third Stimulus Check?
Right now, it’s looking like the third stimulus payment could come with changes in eligibility based on income.7 For the last two stimulus payments, single taxpayers earning up to $75,000 a year and couples earning up to $150,000 a year (based on 2019 tax returns) were able to get the full amount. Parents also received stimulus payments for each dependent child under age 17.8,9
Last week, the Senate approved an amendment to the bill that would phase out stimulus payments for higher income earners. Their goal is to target the stimulus payments for people who need the most help. The amendment didn’t give details on the new levels of eligibility. But senators have made proposals that would lower the incomes for eligibility to $50,000 for single taxpayers and $100,000 for couples.10 Eligible parents would also receive payments for each qualifying dependent child.
Biden’s proposal for the third stimulus check would also expand to cover any dependent over age 17. That means those who support certain eligible dependents over the age of 17 might receive additional money as well.11
How Will You Receive the Third Stimulus Check?
Most people have received their previous stimulus checks by direct deposit with the bank account on file with the IRS. Payments were automatic for anyone who filed a 2019 tax return and/or receives Social Security benefits. If you don’t have direct deposit with the IRS, your payment would take a little more time and come as a check or debit card in the mail.12
Will You Have to Pay Back Money from a Previous Stimulus Check?
You might. Here’s why: Some people were sent stimulus checks by accident. Whoops! We know—imagine the government making a mistake, right? Here’s why you might need to send your money back:
- You make more than the income limit required to receive the stimulus money.
- You were given a check for someone who has died.
- You’re a nonresident alien.
- You don’t have a Social Security number.
- You’re claimed as a dependent on someone else’s tax return.
If you know one of these applies to you, the IRS expects you to find the error and send the money back to them.13 So go ahead and be honest (and proactive). You don’t want any surprises when you go to file your taxes.
How to Return a Paper Check You Have Not Cashed or Deposited
If you’re one of those folks who has to send the money back—and you haven’t cashed or deposited your check yet—here’s what you need to do:
- Write “Void” in the endorsement section of the check, but don’t fold or staple it—don’t even put a paper clip on it.
- On a sticky note or sheet of paper, write down the reason you’re sending the check back.
- Mail the check and the explanation back to your local IRS office (which varies by state).
How to Return a Paper Check You Have Cashed or Deposited
If you have already cashed or deposited the check (or it came to you via direct deposit), here’s how you can return the money:
- Make a personal check or money order payable to “U.S. Treasury.”
- Write “2020EIP” on the payment and include either the taxpayer identification number or Social Security number of the person whose name was on the stimulus payment.
- On a sticky note or sheet of paper, write down the reason you’re sending the check or money order.
- Mail the check or money order and the explanation to your local IRS office (which varies by state).14
What Should You Do With Your Third Stimulus Check?
Let’s be real: Three stimulus checks in a year is not normal. Sure, it’s nice to have a boost in your checking account balance. And for a lot of folks, those stimulus checks have kept food on the table. But don’t ever bank on the idea that another check is coming. If a third payment does come along, it could go a long way to help you catch up on bills, pay off debt, or build up your savings.
Based on your situation, here’s where you start:
If you’re out of work or missing a paycheck, use this stimulus money to protect your Four Walls:
Focus on the necessities so you can have peace of mind as you keep looking for work or get your income back up. That means if you’re working the Baby Steps and you’re out of work, pause your plan for now. Pile up cash until you have a steady income again. Then you can attack your debt. There’s nothing like fighting through a financial crisis to light your fire to be debt-free as soon as possible!
And don’t forget to budget—it’s the best way to make your money go further. EveryDollar is our free and simple budgeting app that will help you see exactly where you need to cut back on your spending.
On the other hand, if your job is safe and you feel like it’ll stay that way, use your stimulus money to build momentum on whatever Baby Step you’re on. Put your debt snowball into overdrive. Knock out your fully funded emergency fund. Or talk to your investment professional about giving your retirement a big boost!
What Else Is Included in Biden’s Stimulus Package?
Like we talked about before, the president’s American Rescue Plan is full of big (and expensive) changes. It includes some of the proposals Biden campaigned on. Here’s a quick rundown:
- Increase the Child Tax Credit from $2,000 for dependents under the age of 17 to $3,000 for children ages 6–17 and $3,600 for children under age 6.
- For 2021, increase the Earned Income Tax Credit from a max of $530 to nearly $1,500. It would also raise the income limit from $16,000 to around $21,000 and allow workers over age 65 to claim the credit.
- Increase the Child and Dependent Care Tax Credit from a max of 35% of qualifying childcare expenses (up to $3,000 for one child and $6,000 for two or more children) to a max of 50% of qualifying expenses (up to $4,000 for one child and $8,000 for two or more).
- Increase weekly unemployment benefit payments under the Federal Pandemic Unemployment Compensation program from $300 to $400 and extend benefits under the Pandemic Emergency Unemployment Compensation program through September.
- Extend the payment relief for federally guaranteed mortgages as well as the moratorium on evictions and foreclosures until September.
- Provide $30 billion in support for renters and landlords.15
- Raise the minimum wage to $15 an hour.16
And there’s more: Biden’s plan also includes grants and loans for small businesses, aid to state and local governments, money for COVID-19 vaccine distribution and testing, money to reopen schools, support for colleges and childcare providers, and more paid sick time for folks who have COVID-19, are quarantining because of it, or are caring for family members who are sick.17
Focus on What Goes on at Your House—Not the White House
It’s hard not to worry as you watch billions and trillions of dollars fly out the window in Washington, D.C. And while those things matter, the truth is, you have ultimate control over your money and what choices are made in your house. You have the power to improve your money situation right now—today—without having to rely on the government.
Ramsey+ will show you exactly how to do that and will give you all the tools, classes and motivation you need to pay off debt, increase your savings, and build wealth for a secure future. It’s worked for millions of people, and you can try it today for free! Take control of your future and get the hope you need—stimulus or not.