The Economic Impact Payments have been sent by the Internal Revenue Service and Department of Treasury. Before the third stimulus payments were approved, the Senate brought changes to the income thresholds so that more Americans would be eligible for the full checks.
The full stimulus amount has also been changed. While the first stimulus could grant taxpayers who were eligible for the full payment of $1,200, the third Economic Impact Payment amount is $1,400. This is a $200 up from the first check and married couples filing a joint return will get two times as much.
Single Income Thresholds
The single income thresholds have been adjusted by the Senate. To get the full stimulus check, your MAGI needs to be less than $75,000. If you don’t know what your Modified Adjusted Gross Income is, we’ll explain it below.
The stimulus checks for single filers phase-out completely at $80,000.
Married Filing Jointly Income Thresholds
The couples filing a joint return has a higher income threshold for the stimulus check. As long as your MAGI is less than $150,000 combined, you’re eligible for the full stimulus check.
The stimulus checks for married couples filing a joint return phase-out completely at $160,000.
Head of Household Income Thresholds
For the first and second Economic Impact Payments, singles who are eligible to file taxes as head of household were put among the single income thresholds but this is now changed for the third stimulus. The income threshold begins at $112,500.
The stimulus checks for heads of households phase-out completely at $120,000.
What is modified adjusted gross income?
A taxpayer’s modified adjusted gross income is basically his or her adjusted gross income but modified. To figure out modified adjusted gross income, fill out Schedule 1 and determine adjusted gross income. Then, add back the following deductions if you claimed any.
- Rental losses
- Passive income or loss
- Excluded foreign income
- IRA deduction
- Taxable Social Security payments
- Losses from a partnership
- Exclusion for adoption expenses
- Interest earned from EE savings bonds used for paying higher education expenses
After the above deductions (adjustments) are added back to your adjusted gross income, you’ll have your modified adjusted gross income. Your MAGI will also be used for figuring out your eligibility for the IRA deduction so it’s important to take it into account before you calculate tax liability as you might not be eligible for the full deduction.