As the brutal second wave of the COVID-19 pandemic crested in late December 2020, U.S. lawmakers passed a badly needed and long-delayed stimulus package that included a second round of direct payments to most American taxpayers.
Former President Donald Trump signed the $900 billion compromise bill into law a few days before the dawn of a new year that Americans hoped would bring an end to the acute phase of the pandemic. But it remained anyone’s guess how long the economic fallout would last.
That uncertainty, combined with unified Democratic control of the presidency and both houses of Congress, spurred lawmakers to begin work on yet another stimulus package in January 2021.
Features of the American Rescue Plan (Biden’s Plan): Third COVID-19 Economic Stimulus Payment and More
In addition to a host of sorely needed economic support and aid measures, this COVID-19 relief measure included a third round of direct payments to Americans — the biggest yet, at up to $1,400 per individual and $2,800 per joint-filing couple, plus an expanded definition of qualifying dependents.
The measure passed into law in early March 2021, and payments began hitting bank accounts within days.
The third round of stimulus checks is just one piece of a much larger piece of legislation that closely mirrors President Joe Biden’s $1.9 trillion American Rescue Plan, a sweeping stimulus proposal announced on Biden’s first day in office.
Led by U.S. House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, the House and Senate approved funding for the plan in early March 2021, and President Biden signed the measure shortly thereafter.
In addition to the third stimulus check, the relief package includes most of the major pillars of the White House’s proposal, such as:
- Funding for a national COVID-19 vaccine program that prioritizes vulnerable Americans and essential workers
- Funding for a comprehensive plan to safely reopen public schools across the United States
- Expanded emergency paid leave (paid family leave) for American workers, including many not covered by existing pandemic leave programs
- Extended pandemic unemployment benefit programs for workers laid off due to the ongoing economic crisis, including a $300 boost to federal unemployment benefits through Sept. 6, 2021, and about $10,000 in tax-free unemployment benefits for low- and middle-income taxpayers
- Extended moratoria on rental housing evictions and foreclosures and increased funding to combat homelessness
- Expanded nutrition assistance programs for families struggling to put food on the table
- A temporary expansion of the child tax credit for low- and middle-income families, paid monthly at $300 for children aged 6 and under and $250 for children aged 6 and over (per the Tax Foundation)
Of course, it was the prospect of direct payments — a maximum check size of $1,400 per individual and $2,800 per joint-filing married couple — that caught many Americans’ attention.
Third COVID-19 Stimulus Check Eligibility: Income Limits and Phaseouts
Eligibility requirements for the second round of COVID-19 economic stimulus checks were very similar to those for the first stimulus payment.
Not so for the third round. This round’s income phaseouts — the space between the maximum income threshold for payment of the full $1,400 and the income threshold above which taxpayers won’t receive any payments — differed noticeably from the first two rounds.
According to CNET, the income eligibility thresholds for the third round of direct payments depended on filing status:
- Single (Including Married Filing Separately): Recipients with incomes under $75,000 receive the full $1,400 payment per individual. Recipients with incomes above $100,000 receive no payment. For recipients with incomes between $75,000 and $80,000, check size declines until phasing out completely at $80,000.
- Head of Household: Recipients with incomes under $112,500 receive the full $1,400 payment per individual. Recipients with incomes above $120,000 receive no payment. For recipients with incomes between $112,500 and $120,000, check size declines until phasing out completely at $120,000.
- Married Filing Jointly: Recipients with incomes under $150,000 receive the full $2,800 payment per couple. Recipients with incomes above $160,000 receive no payment. For recipients with incomes between $150,000 and $160,000, check size declines until phasing out completely at $160,000.
The IRS determines income eligibility for the third round of stimulus payments using recipients’ 2019 or 2020 tax returns. Recipients who’ve prepared and filed their 2020 taxes before the IRS determines eligibility will see their payments calculated based on 2020 adjusted gross income (AGI).
Those who don’t file their 2020 taxes before the determination occurs will receive payments based on 2019 AGI — the same figure used to calculate the first two rounds of stimulus payments.
Eligibility for Dependents and People Who Don’t Normally File Tax Returns
Each child and adult dependent claimed on the recipient’s tax return qualifies for a $1,400 payment only if the recipient earns under the full-payment income threshold that corresponds to their filing status.
For example, a head of household with two qualifying dependents would only receive $2,800 ($1,400 per dependent) if they earned under the $112,500 income threshold for a full stimulus payment.
The IRS may not require people who meet any of the following criteria to file income tax returns:
- Federal benefits, such as Social Security Disability Insurance, account for much or all of their income
- They earn less than $12,200 (or $24,400 if married filing jointly), can’t be claimed as dependents on anyone else’s tax returns, and are over age 24
- They have no income at all
As with prior stimulus check rounds, it’s likely that would-be recipients who don’t normally file tax returns will be required to file information returns as a condition of stimulus check receipt.
Refer to IRS guidance on information returns for more details.
Noncitizen Eligibility for Stimulus Checks
The first two rounds of stimulus payments were closed to noncitizens. That changed in the third round, which authorized payments to families where at least one member has a valid Social Security number.
This benefited hundreds of thousands of households where noncitizen parents or heads of household support U.S. citizen minors or dependents.
What to Do While Waiting for Your Third Stimulus Check
The third round of direct payments to Americans began hitting bank accounts within days of the American Rescue Plan’s passage, so it’s not too soon to begin thinking about how you’ll spend your funds.
If you received payments in the first and second stimulus rounds earlier in the pandemic, you might already have a good idea.
Use a Bill Negotiation or Budgeting App to Cut Expenses Immediately
Sign up for a bill negotiation app like Billshark to find savings opportunities hiding in plain sight. Or use a mobile-friendly budgeting app like Mint or You Need a Budget (a top Mint alternative) to keep better tabs on your spending and whip your budget into shape.
Actually, why not do both?
Consolidate High-Interest Debt
If you’re carrying high-interest credit card balances and haven’t made much headway on payments lately, consider applying for a 0% APR balance transfer credit card to bridge the gap until your stimulus check arrives.
We’re partial to the U.S. Bank Visa® Platinum Card, which keeps its balance transfer APR at 0% for 20 months from account opening, or the Citi® Double Cash Card, which has an 18-month 0% APR balance transfer promotion.
Before you apply, review our guidelines for using balance transfer credit cards responsibly.
Not interested in applying for another credit card? An unsecured personal loan might be a better fit. Personal loans usually have higher borrowing limits than credit cards, though 0% APR promotions are rare.
Add a Side Hustle or Two
Side hustles come in two flavors: active and passive. If you have time to spare each week, you’re a great fit for the former. If you have an underutilized asset like a second car or spare bedroom, you’re made for the latter. And if you have both, you’re in even better shape.
According to Yahoo Finance, roughly half of all Americans pursue at least one side hustle, so you’ll be following a well-worn path. If you enjoy working a bit more on the side, there’s nothing keeping you from doing so well after your stimulus check comes through.
Side hustle ideas abound. If you’re looking to milk your car for everything it’s worth, consider driving for delivery apps like Instacart and DoorDash or listing your vehicle on a person-to-person rental marketplace like Turo.
If you have extra space to monetize, try renting out your garage, shed, or any other secure storage space on Neighbor.com or renting out a spare bedroom or accessory dwelling unit to short- or medium-term guests.
Use a Paycheck Advance App
Need some extra funds right now? Try a free or low-cost paycheck advance app (Brigit is a top contender, but others do the trick as well) that advances just what you need to make it to payday (or stimulus check day).
Brigit is free for base version users and doesn’t require a monthly subscription. But many users find the peace of mind that comes with recurring overdraft protection worth the $10 monthly fee.
When your stimulus check hits, use the windfall to cover your last advance and build up your savings to avoid further draws.
Now that President Biden’s American Rescue Plan has become law and stimulus direct deposits are hitting bank accounts, Washington is turning its attention to an equally ambitious plan to modernize the United States’ creaking road, rail, and electric infrastructure.
This effort has also been billed as an economic stimulus and pandemic relief measure, though its effects are likely to linger long after COVID-19 infection rates subside.
We’ll stay on top of the legislative process as it develops. In the meantime, whether you’re eligible for the current round of stimulus payments or not, refer to our roundup of COVID-19 resources to learn more about your options for financial and legal relief in these difficult times.