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Everything You Need to Know About Plus-Up Stimulus Payments, Including if You Qualify Thumbnail

Everything You Need to Know About Plus-Up Stimulus Payments, Including if You Qualify

Cassandra Kirby was recently quoted in this U.S. News & World Report article called "What Is a Plus-Up Payment, and Will You Get One?" and wrote this blog post as a follow-up piece with her full thoughts:

The IRS recently started sending out “plus-up” stimulus checks, but not everyone qualifies or even knows what they are. The supplemental plus-up payments from the IRS refer to those individuals or families who were due some additional amount of the third stimulus after filing their 2020 tax returns or who received a third Economic Impact Payment based on a 2019 tax return.

The first of the Economic Impact Payments was for eligible individuals to receive $1,200 or $2,400 if married filing jointly, with an adjusted gross income up to $75,000 for individuals filing single or married filing separately, $112,500 if filing as head of household, and $150,000 if filing married filing jointly. A payment is reduced by 5% of the excess of the individual’s adjusted gross income over the applicable threshold. For eligible individuals with no qualifying children, the payment is reduced to $0 if their adjusted gross income is at least $99,000 if filing single or married filing separately, $136,500 if filing as head of household, and $198,000 if filing married jointly. For individuals with qualifying children, the phase-out figures increase by $10,000 for each qualifying child. 

This payment was considered an advance credit against 2020 tax, meaning it was not included in their taxable income for 2020 and income tax is not due on the amounts received. 

The second of the Economic Impact Payments added on January 5, 2021, provided a $600 per individual plus $600 for each qualifying child if your adjusted gross income did not exceed $150,000 if married and filing a joint return, $112,500 if filing head of household, $75,000 for eligible individuals using any other status. The payment was reduced by 5% of the amount by which your adjusted gross income exceeds each applied threshold amount. 

The third Economic Impact Payment fell under the American Rescue Plan Act of 2021, which was signed on March 11, 2021. It provided $1,400 per individual plus $1,400 for each qualifying dependent and was paid in full if your adjusted gross income does not exceed $150,000 if married and filing a joint return, $112,500 if filing head of household, and $75,000 for eligible individuals using any other filing status. Payments are phased out or reduced above those figures. Taxpayers will not receive a third payment if their adjusted gross income exceeds the upper end phase-out range of $160,000 if married and filing jointly, $120,000 if filing head of household, and $80,000 for all other filers. 

Some taxpayers will be entitled to plus-up payments when they file their 2020 tax return if their income in 2020 was lower than that in 2019, allowing them to fall into the appropriate eligibility thresholds, or if they added a dependent in 2020. These payments are being sent separately from your 2020 tax refund and the previous Economic Impact Payments mentioned above. The IRS has indicated that they are sending plus-up payments out every week. You can check your plus-up payment status on the Get My Payment tool on the IRS website: Get My Payment | Internal Revenue Service (irs.gov)

The IRS is evaluating this eligibility for plus-up payments after they process your 2020 return, and you do not have to do anything to receive the payment if you are eligible. 

There are several different criteria associated with the third payment, aside from the income thresholds mentioned above that you should be mindful of.

Here’s an example where a family would be due additional stimulus money from the third payment: let’s say a married couple with one child had an adjusted gross income of $165,000 in 2019, and because their income was more than $160,000, they are not eligible for any portion of the third payment; however, in 2020, they had another child and their adjusted gross income dropped from $165,000 to $155,000. Now, they fall within the $150,000-$160,000 threshold with an additional dependent and they are eligible for $2,800 in stimulus money, or 50% of total eligibility, which is $1,400 x 4 members of the family ($5,600/2, the phaseout factor). 

So, if you think you qualify for a plus-up stimulus check, keep an eye on your bank account or mailbox and it should be with you soon.

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Cassandra Kirby, COO and Private Wealth Advisor

To discuss this content further or to ask any financial-life question you may have, we encourage you to reach out to us at 724.942.2639 or schedule a FREE/no-obligation time to chat with Cassandra at your convenience.  

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