tax breaks, IRS — April 14, 2021

6 Ways the Latest Stimulus Payment is Different from the Others

by Susannah McQuitty

There are six main differences between EIP3 and both EIP1 and EIP2.

The IRS has now officially distributed more than 156 million stimulus payments for the third round of COVID-19 relief, and as people have been getting their economic impact payments (EIPs), many have noticed some key differences between this payment and the last two.

Here are the six biggest differences between the third economic impact payment (EIP3) and the others.

EIP3 is basically an early payment of next year’s Recovery Rebate Credit

The Recovery Rebate Credit is a tax credit designed to help taxpayers during a time of disaster—getting an advance of the credit means that the money you’d usually get at tax time is available much sooner. That also means you have a safety net if you didn’t get the full payment that you technically qualify for—when you report EIP3 next year on your taxes, your credit will be refactored against your actual 2021 tax situation. Any additional dollars you qualify for will be included in your refund or help offset any taxes owed.

Technically, this isn’t too different from EIP1 and EIP2. Both of these earlier payments were advance payments of the 2020 Recovery Rebate Credit, so the main difference is the qualifying year. Since EIP3 is an advance of your 2021 tax credit, the 2020 RRC won’t be affected by your most recent stimulus payment.

For most people, EIP3 will be larger than the other two stimulus payments

Most married taxpayers who filed a joint tax return will receive up to $2,800 from EIP3, and all other eligible individuals will receive up to $1,400. Those with qualifying dependents on their tax return will receive up to $1,400 per qualifying dependent. That’s more than the $1,200 EIP1 and the $600 EIP2, and payments have the potential to grow even more because of the next two differences.

Non-child dependents like aging parents and college students qualify for extra EIP3 payment amounts

Unlike the first two payments, the third payment is not restricted to children under 17. Eligible families will get a payment for all qualifying dependents claimed on their return. This may include older relatives like college students, adults with disabilities, parents and grandparents.

Taxpayers without a valid SSN who have a qualifying dependent with an SSN can actually get the dependent portion of EIP3, which is $1,400, provided the taxpayer meets all other eligibility and income requirements.

Married couples with only one Social Security Number can get a partial EIP3

For taxpayers who file jointly and only one individual has a valid SSN, the spouse with a valid SSN will receive up to a $1,400 third payment and up to $1,400 for each qualifying dependent claimed on their 2020 tax return. This is different from the first two payments, because those originally disqualified the couple if one spouse didn’t have an SSN—but the American Rescue Plan (ARPA) retroactively qualifies couples with only one Social Security Number for a partial EIP1 and EIP2 payment, so this is less of a difference now (a nice change for many!).

What about couples with one spouse in the military? Good news—you qualify for the full married filing jointly amount, as long as one of you has a valid SSN. Again, that’s up to $2,800 for the couple, plus up to $1,400 for each qualifying dependent.

Income phase-out amounts are different for the third stimulus payment

Now, there’s got to be checks and balances somewhere, and one of the balancing features of EIP3 is stricter income limits for payment qualification.

Taxpayers will not receive a third payment if their adjusted gross income exceeds:

  • $160,000, if married and filing a joint return or if filing as a qualifying widow or widower
  • $120,000, if filing as head of household
  • $80,000 if using other filing statuses, such as single filers and married people filing separate returns

Bottom line: Some people simply won’t be eligible for EIP3, even if they received first or second EIPs or are eligible for the 2020 RRC.

Didn’t file yet this year? You may be eligible for a Supplemental Payment

Let’s say you and your spouse got EIP3 before you filed your joint 2020 tax return, and you had a baby in 2020. Your EIP3 would only be $2,400 because you didn’t have a child in 2019, and that 2019 tax return is the most recent info the IRS has on hand. Does that mean you have to wait to claim next year’s Recovery Rebate Credit?

Nope. If your EIP3 is based on your 2019 return, and your 2020 taxes show that you actually qualify for a higher amount than you received, you may qualify for a supplemental, or “plus up,” payment. That means the IRS will automatically re-evaluate your eligibility via your 2020 information and send you a payment for the missing amount automatically. You don’t have to apply for the missing amount—the IRS will calculate and send it on their own.

That’s it for EIP3—ready to get your taxes done?

Hopefully this post has helped clear the air of mystery around the third economic impact payment, and now that it’s out of the way, you can finally sit down and get your tax return finished. The deadline is May 17 after all, which is about a month away. Get a head start by signing up or logging in to!

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