Stimulus payments, like tax deductions, can at times seem difficult to understand.. But what’s truly difficult is when you are paying more from your paycheck than you need to. And with so many of us affected by the pandemic, inflation and other financial challenges, we all could use a break.
That’s why we are breaking down the third stimulus payment qualifications into simple to understand terms.
Here’s the simple breakdown.
1. The third round of stimulus is $1,400 per qualifying individual.
This means you, your wife and your kids. Also, if you had a child any time in 2021, they qualify as well. So in other words, a typical family of 4 that qualifies would receive a $5,600 credit on their 2021 taxes they file in 2022.
2. Qualification is based on your adjusted gross income (AGI).
For individuals with an AGI below $75,000 or a couple filing jointly with an AGI below $150,000, you would qualify for $1,400 or $2,800 respectively.
3. If you are a little over these limits, consider this option to still qualify.
Individuals or married couples who miss the limit by a few thousand dollars can actually qualify by doing things like contributing to a 401k or a qualified IRA. By contributing the right amount to reduce your AGI below the threshold limit, you can still qualify.
4. The third stimulus is not considered taxable income.
This has been a point of confusion for many people. Since this third stimulus is not included in your gross income, it’s not considered taxable, which makes it an even better deal!
5. If you have already received the third stimulus, you don’t need to pay it back.
If you have already qualified for the payment based on your 2019 or 2020 returns, and your income changes in 2021, you still will not be required to pay it back.
Do you still have questions? That’s what we’re here for. Our job is to keep up on the ever changing tax landscape. Let us put our knowledge to work for you.