Third Stimulus Check: How Much Could Your Next Relief Payment Be?

(CBS Detroit) — A third stimulus check seems to grow more and more certain by the day. As the economic toll of the ongoing COVID pandemic continues to mount, President Joe Biden and politicians on both sides of the aisle support putting more money in the pockets of Americans as soon as possible. While a relief payment seems likely, how much and when remain in question.

A $1,400 stimulus check is part of the $1.9 trillion relief package proposed by the Biden administration. The American Rescue Plan, in its current form, would also include more unemployment benefits, an improved child tax credit and additional aid for millions of Americans in dire economic straits because of the ongoing COVID-19 pandemic. Democrats control both houses of Congress and have signaled their willingness to pass stimulus legislation on a straight party-line vote if they have to. They’ve also paved the way for budget reconciliation, which would let them sidestep the filibuster in the Senate and pass stimulus with a simple majority.

The topline $1,400 number that’s received so much attention seems destined to become a reality. But the actual amount that reaches people’s bank accounts could change based on the income threshold, the number of dependents and other factors.

Last week, a group of 10 Senate Republicans put forth a $618 billion counteroffer to the American Rescue Plan. Their package would reduce the direct payment to $1,000 and cap annual earnings for recipients at $40,000, after which the stimulus check amount would incrementally fall to $0. Late last week, the President dismissed the idea of reducing the amount. “I’m not cutting the size of the checks” Biden stressed on Friday. “They will be $1,400, period. That’s what the American people were promised.”

The idea of lowering the annual income requirement has gathered some steam, though.

The previous two stimulus checks phased out for individuals with an adjusted gross income (AGI) over $75,000 per year and married couples with an AGI over $150,000. (AGI is the total of your wages, interest, dividends, alimony, retirement distributions and other sources of income minus certain deductions, such as student loan interest, alimony payments and retirement contributions.) For every dollar of income over the threshold, the previous two stimulus payments went down by five percent. So the $1,200 payment from the CARES Act shank to $0 for incomes over $99,000 ($198,000), and the $600 from the second stimulus shrank to $0 for incomes over $87,000 ($174,000).

The Biden administration is considering lowering the income threshold to $50,000 ($100,000). Assuming the same five percent formula, a $1,400 ($2,800) payment would actually be $700 ($1,400) at an annual income of $64,000 ($128,000) and $0 at an annual income of $78,000 ($156,000).

The thinking behind this sort of change is ensure that more money gets spent in the broader economy rather than saved. According to a survey from the Federal Reserve Bank of New York, the average percentage of the first stimulus payment that a household spent on essentials decreased as income increased. The average percentage of the first stimulus payment that a household saved increased as income increased. While reducing the income threshold would better target the economy, it would also reduce the number of people receiving a third stimulus check and the amount received by others.

A recent Democratic proposal kept the income threshold at $75,000 ($150,000) and placed the upper limit at $100,000 ($200,000). Under this setup, a $1,400 ($28,000) as incomes rose to $100,000 ($200,000). The matter remains very much undecided.

Dependent children could also affect the size of your next stimulus check. The second stimulus check included $600 per dependent child. A dependent child was defined as anyone under the age of 17 living in your household. There was no limit to the number of children. And for the purpose of the phaseout, that $600 was added to the total for the adult(s). As an example, one adult, who had two kids, would have received $1,800 in January if her AGI was under $75,000. That amount would have decreased to $1,200 at an AGI of $87,000; $600 at an AGI of $99,000 and $0 at an AGI of $111,000.

The American Rescue Plan looks to expand the pool of eligible dependents to include those over the age of 16. In that group would be college students and older adults with certain kinds of disabilities. Such a change could make an estimated 13.5 million more people eligible to receive stimulus checks.

The amount of a third stimulus check could also be affected by a recipient’s taxes. To speed up distribution, the Internal Revenue Service has used the most recent tax filings to determine AGI and, therefore, eligibility. AGI changes from year to year, as people receive raises, switch jobs or become unemployed. The first relief payment was passed in March of 2020. At that point, some people had filed their 2019 taxes and some had not. So the check amount could have been based on 2018 or 2019 taxes. The second relief payment became law in December of 2020, after most everyone had filed their 2019 taxes. So that amount was determined by 2019 tax filings.

The third relief payment could be signed by early to mid-March of 2021. At that time, some people will have filed taxes for 2020. Others won’t have. That means a third payment could be based on 2019 or 2020 taxes. The past year has seen significant unemployment, which often hurts the finances of individual households. If one’s AGI changes significantly from one tax filing to the next, so too could the amount of their next stimulus check.

When might that third stimulus check arrive? The administration’s goal is to sign the American Rescue Plan into law by March 14. That is also when the current $300 federal unemployment benefit bonus expires. Assuming President Biden is able to sign the relief package on March 14, direct deposits would likely start the week of March 22, with checks beginning to arrive the week of March 29.

House Speaker Nancy Pelosi seems to have an even more aggressive timeline, however. According to comments made last Friday, she aims is to pass the American Rescue Plan in two weeks. The Senate would then be able to pass it on a straight party-line vote. In this scenario, the stimulus package could pass through Congress by February 26 and be signed into law on March 1. Direct deposits would start arriving in bank accounts by March 8, and checks would start being mailed on March 15. Either timeline could be extended, due to the ongoing impeachment trial in the Senate or some other reason.

Originally published at 2:46 p.m. ET on Thursday, February 11, 2021.