Stimulus check formula: New details emerge about $1,400 checks that change everythingFebruary 19, 2021
How much money you could get in afor your household — whether it’s — depends on a formula that the IRS will use to based on the that Congress is working to pass.
The latest proposal (PDF) on the table would provide in a household a of up to . It would also include an — a compared to the previous two checks. For example, a family of four could potentially get $5,600, versus up to $2,400 supplied by the .
The final equation determiningyour household could get in a third check is still up in the air, however, and could potentially set the first two times. Others would get a , a or . We’ll explain more below. Meanwhile, here are the right now, including what happens if a . This story is regularly updated with new information.
How the stimulus check formula determines how much money you’ll get
Before we explain how the third stimulus check could change the equation and what the outcome would mean for you, here’s how it works. You canif you’re a . But in general, is one of the most important factors in determining your stimulus check total. The others include your adjusted gross income, or , and the stimulus check formula.
The major variables being plugged into the stimulus formula are:
- Your you put on your .
- Upper limits for single taxpayers, heads of household (e.g., a single person with at least one child) and married couples filing jointly.
- Number of you claim.
- “Reduction” or “phase-out” rate — the amount your total would drop for every $1,000 you make above the limit to qualify for the full check. In other words, this part of the equation calculates a partial payment if you don’t get the full thing.
Exactly how the third stimulus could change the equation
The recent proposal to “target” the $1,400 stimulus check would keep the highest earners from receiving a partial payment. If the proposal is adopted, the qualifications would be:
- Full $1,400 amount if you earn under $75,000 (single taxpayer); $112,500 (head of household); $150,000 (married)
- Disqualified at $100,000 (single); $150,000 (head of household); $200,000 (married)
- Phase-out rate increased to preserve this upper limit
- These high earners would not receive partial checks even if they have dependents
This major change to dependent rules is important
With the previous two stimulus checks, it was possible to get a partial payment even if you exceeded the maximum income limit — if you had dependents. For example, let’s say a married couple with anof $200,000 claims two dependents. With a $1,400 stimulus check that uses the previous formula, that family could still get a $600 check.
That’s because the previous formula begins with the largest amount you’d be eligible to receive (for example, $1,400 per single taxpayer or $2,800 for joint filers), and add $1,400 for each qualifying dependent. Then it reduces the total possible sum according to your AGI and the phase-out rate.
It’s a little like starting a test with a perfect 100 point score and subtracting every point you “miss,” rather than starting with zero points and adding them all up at the end of the test.
But in this case, the dependents you name can start you at a higher value, say 110 points in our classroom example. So by the time you subtract “points,” you may still get more than people who don’t have dependents — even if your AGI is above the maximum cap. The more child dependents you have, the higher your starting value and the higher your ending value, too.
The proposal to target stimulus checks would set a firm cutoff, which means that it would start by evaluating your AGI. If you’re over the limit, it wouldn’t matter how many dependents you have. You still wouldn’t be eligible for a check.
On the other hand, a family with a large number of dependents and an AGI within the boundaries could still potentially receive a large partial payment, as long as they come in below that absolute upper income limit. You can.
Phase-outs and reduction rates: What to know
A sliding scale is involved here. With the second check, for example, if yourwas less than $75,000 as a single taxpayer (that means no kids), you would receive the entire . If you made more than that, the size of your check would diminish until $87,000, after which point you’d be ineligible.
For the $1,400 stimulus check — note this could still change — you might receive the full $1,400 amount if you earn under $75,000 a year (your AGI as a single taxpayer), with diminishing returns up until a $100,000 cutoff. You’d receive a partial check for an AGI between $75,000 and $99,900. Again, you can see the differences in our.
For heads of households and married couples with dependents, these other household members are an important part of the equation — up to a point (see above).
For more information, here are the top things to. And see how , and people who could also qualify, including families with .