10 Things to Know About the 2021 Stimulus Payments
By Ashley Burnside
Note: This post has been updated to reflect how people can still claim the 2021 stimulus payments if they haven’t received them—even though the standard timeframe for filing 2021 tax returns has passed.
On March 11, 2021, President Biden signed the American Rescue Plan into law, which provided essential financial relief to individuals and families along with COVID-19 relief to states and localities. One component of the package is a third round of stimulus payments. Despite wide news coverage about these payments, many have questions about who’s eligible and how to receive them. The third round also has different eligibility rules than the first and second rounds of payments, which were distributed earlier.
Below are ten things to know about the third round of payments—including information on filing your 2021 taxes if you missed any or all of your payment:
1. The payments were $1,400 per qualifying adult ($2,800 for married taxpayers filing a joint return) and $1,400 per dependent. For the third round of stimulus payments, taxpayers could get payments for dependents of all ages, including children over the age of 17, college students, and adults with disabilities. The taxpayer received the payment on behalf of the dependent, although financially independent college students and young adults who are not claimed as a dependent may be eligible for their own payment. The payments were an advance against a new credit for tax year 2021 and will not affect eligibility for other tax credits. Filers can claim the payment, which is called a Recovery Rebate Credit, on their 2021 tax return if they didn’t already receive the full amount. Filers can also claim the third stimulus payment using the Code for America simplified filing tool if they don’t typically file a tax return.
2. It’s not too late to file your taxes for 2021 to receive any of the third payment that you didn’t get automatically. If you qualify for a higher payment based on your 2021 circumstances, such as your family size or income changing, you will have an opportunity to get that additional money as a (on your tax return) when you file your taxes. It’s not too late to file, even though the April deadline for filing taxes has passed. You can also claim the third stimulus payment using the Code for America simplified filing tool if you don’t typically file a tax return. The simplified filing form typically takes 15 minutes to complete and doesn’t require any tax documents. (If you didn’t get any portion of the first two stimulus payments, you can’t claim them on the 2021 return. You will need to file a 2020 return if you haven’t yet done so, or amend the one you did file, to claim the earlier payments.)
3. You can’t receive the $1,400 payment if you can be claimed as someone else’s dependent in 2021. Whether you can be claimed as someone else’s dependent is based on factors including your relationship to the filer, your age, whether you lived with your parents for more than half of the year, and whether you were financially independent for more than half of the year. This will affect many full-time college students under age 24. However, it’s important to review the rules, since not all college students are dependents. Here are more details about whether or not a child qualifies as a dependent. People who were dependents in 2020, but not 2021, can claim the Recovery Rebate credit to get their payment when they file their 2021 taxes. They can also file a tax return using the simplified filing tool.
4. You don’t need to have earned income to qualify. The full payment is available to those with little to no income. Even if you are making $0, you can still receive the full payment. The payments phase out starting at $75,000 for single filers. The phase-out rates are more restrictive than for the first and second round of payments, with individuals making $80,000 per year ineligible for any payment ($120,000 for individuals filing as heads of households, and $160,000 for married couples filing a joint return.)
5. You must have a Social Security number to receive the payments, but members of mixed immigration-status families are eligible. Unlike the previous rounds of stimulus payments, anyone with a Social Security number can receive the payment who is otherwise income eligible. And unlike the first and second round of payments, children with Social Security numbers can get the payment even if both parents file their taxes with Individual Taxpayer Identification Numbers (ITINs). This will allow about 2 million children who are citizens or lawful permanent residents and who were previously left out of the payments to get critical financial support. However, filers with ITINs are still not eligible to receive the payment for themselves.
6. Most people received the third stimulus payment already, based on previous tax returns or information from other government programs. The IRS made payments based on what it knew from 2019 tax returns or the first two rounds of stimulus payments. Social Security recipients (both retirement and disability) should have received the payments automatically, as did Supplemental Security Income (SSI) recipients, railroad retirees, and recipients of veterans’ benefits. Individuals who registered for the Child Tax Credit (CTC) online using the non-filer sign-up tool also should have received the third stimulus payment automatically.
Some people received additional “Plus-Up” payments from the IRS because of their changing household circumstances that qualified them for a higher payment. The IRS sent Plus-Up payments to people who received their third stimulus payment by using their 2019 tax return information or information received from a government agency, and who were eligible for a higher payment based on their 2020 tax return.
In January 2022, the IRS sent out Letter 6475, which confirmed the total amount of the third stimulus payment that you should have received in 2021. You can also view what payment you were eligible for using the IRS online account.
7. You don’t have to pay back money you received in 2021. It’s important to note that you won’t owe money if you would have qualified for a smaller payment based on your 2021 income or family situation.
8. The payments will be automatically paid by direct deposit if you provide a bank account on your tax return. Checks will be mailed if there is no account provided. Those who have a direct deposit on file with the IRS will receive their payments faster than those getting a check by mail.
9. Like other tax refunds, these payments will not be counted toward eligibility for means-tested programs and will be disregarded as an asset for 12 months. This means the payments won’t jeopardize your participation in programs including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and public housing. In addition, the rebate checks are not considered taxable income.
10. The first two payments were protected against being intercepted for debts owed to federal and state agencies, but the third payments provided as part of a Recovery Rebate are not. The IRS has announced that it will protect the payments from seizure for federal tax debt repayment, although it won’t for other debts to private debt collectors and other federal or state agencies.
The American Rescue Plan also includes temporary expansions to the Child Tax Credit (CTC) for families with children as well as to the Earned Income Tax Credit (EITC) for workers without children and for workers without children in the household. These expansions increase the credits available to tax filers and expand the ages of eligibility. You can also claim both expansions when you file your taxes this year. We have more information about claiming the expanded CTC payment in your tax return this year here.
*updated on May 2022