What you need to know about the third round of stimulus payments

Does your family qualify for a stimulus payment? We'd like to hear how you will spend it. Email money reporter Alicia Adamczyk at [e-mail].

President Joe Biden signed off on the $1.9 trillion American Rescue Plan Act Thursday, guaranteeing millions of American households will receive a third round of direct stimulus payments.

The bill extends federal unemployment insurance benefits through Sept. 6, 2021, and increases the current child tax credit for 2021, among many other provisions. It will also send an estimated 89% of tax filers a third direct payment worth up to $1,400 for each individual and his or her dependents.

Now, the Internal Revenue Service (IRS) will begin sending payments to eligible households.

Here's what to know about the third round of stimulus payments. 

How much are the payments worth?

The third economic impact payment is worth up to $1,400 per individual and dependent.

Single filers earning an adjusted gross income (AGI) up to $75,000 and heads of household earning up to $112,500 will receive $1,400, and married couples earning up to $150,000 are eligible for $2,800. Those taxpayers will also receive $1,400 for each dependent.

After that, there is a steep income phase out: The payments decrease to zero for single filers at $80,000, for heads of household at $120,000 and for married couples at $160,000 AGI. Taxpayers will receive the same amount for each dependent.

The phase out rate is not uniform for the third round of direct payments, according to the Tax Foundation. It will depend on a taxpayer's filing status and the number of dependents. 

Single filers, for example, will experience a 28% phase out rate, meaning that they will receive $280 less for every $1,000 over $75,000 they earn, says Garrett Watson, a senior policy analyst at the Tax Foundation. An individual with an AGI of $77,000 would receive $840.

At the same time, while a married couple with no dependents would also see a 28% phase out rate, a couple with one dependent would see a 42% phase out rate. A couple with one dependent and an AGI of $155,000 would receive $2,100 total.

To see how much relief you may receive, use this calculator.

Who qualifies for a payment?

Taxpayers must have a Social Security number to be eligible for a payment and meet the income requirements detailed above.

While the steeper income phase out reduces the number of taxpayers qualifying for this stimulus payment, all dependents of eligible taxpayers will also receive a payment for the first time. That includes millions of college students, disabled adults and elderly Americans. Mixed-status families — in which some members have Social Security numbers and some do not — are also eligible, as they were for the second payment.

Like the second stimulus payment, those who owe child support should not have any of their stimulus money withheld.

What tax year are the payments based on?

The payments will be based on 2020 AGI if a taxpayer has already filed tax returns for last year. If not, they will be based on 2019 income.

Are the payments taxed?

No.

When will the payments be disbursed?

Biden said some of the payments could be disbursed later in March. The IRS began sending out the previous round of stimulus payments within a few days of the last relief bill's passage in December.

Like the other two payments, taxpayers can track the status of their payments with IRS Get My Payment tool. Just note that that tool has been glitchy in the past, and can be overwhelmed when too many people try to use it at once.

How will the payments be sent?

The payments will primarily be sent via direct deposit, just like the other two rounds.

If the IRS doesn't have your direct deposit info, you may get a paper check or a pre-paid debit card in the mail.

What if I still haven't received the first and/or second payment?

The IRS has sent all of the first and second stimulus payments to qualifying Americans that the agency has taxpayer information for. If you believe you are eligible and didn't receive one, or received less than you qualify for, then you will claim a Recovery Rebate Credit on your 2020 tax return. This is line 30 of your 2020 Form 1040 or 1040-SR.

On this line, you will list the difference between what you are owed and what you received (you can find the amount the IRS paid you in your IRS.gov account). People who don't earn enough money to file taxes will also need to file a return to get any missing payments.

Don't miss: The Senate just passed the American Rescue Plan—here's how it differs from the House version

Check out: Use this calculator to see exactly how much your third coronavirus stimulus check could be worth