The American Rescue Plan Act has passed and includes a third much-anticipated economic impact payment (EIP). This is one of several government measures intended to help financially stressed citizens. This will be the third round of EIPs since the pandemic began disrupting the economy at the beginning of 2020, leaving many Americans without jobs or any way to support their families.
This round of EIPs will be:
$1,400 ($2,800 for joint filers), plus
$1,400 per dependent—unlike the prior payments, the payment will apply to all of a taxpayer’s dependents regardless of age.
Since the payments are meant for lower-income taxpayers, they will phase out for higher-income taxpayers. Thus, the payment amounts will phase out for taxpayers with adjusted gross incomes (AGI) between:
$150,000 and $160,000 for married taxpayers filing jointly;
$112,500 and $120,000 for head-of-household filers; and
$75,000 and $80,000 for all other filers.
The Treasury will make these payments automatically based on a taxpayer’s filing status, AGI, and claimed dependents on their 2019 return—or the 2020 return if it has been filed and processed by the IRS by the time the IRS generates the payments. Call Key2 Accounting today for more information.