The COVID-19 pandemic brought unprecedented challenges, leading the U.S. government to enact several relief measures aimed at supporting American families and stimulating the economy. Among the most direct and impactful of these measures were the Economic Impact Payments, commonly known as stimulus checks. The third round of these payments, authorized by the American Rescue Plan Act of 2021, provided a significant financial boost to millions.
For married couples filing jointly, understanding the intricacies of this third stimulus check was particularly crucial, as their combined income, shared dependents, and unique tax filing status directly influenced their eligibility and the amount they received. This article will delve into the specifics of the third stimulus check, with a particular focus on how it impacted married couples filing jointly, offering a comprehensive guide to its eligibility, distribution, and reconciliation.
The American Rescue Plan Act of 2021: The Genesis of the Third Payment
Signed into law on March 11, 2021, the American Rescue Plan Act (ARPA) was a sweeping legislative package designed to provide economic relief and combat the ongoing effects of the pandemic. A cornerstone of this act was the provision for a third round of Economic Impact Payments.
Unlike the previous two rounds, which offered $1,200 and $600 per eligible individual respectively, the third stimulus check provided a more substantial $1,400 per eligible adult and $1,400 per eligible dependent. This expansion to include all dependents, regardless of age, was a significant change that benefited many families, including those with adult children, college students, or elderly relatives living with them.
Eligibility for Married Couples Filing Jointly: The AGI Thresholds
Eligibility for the third stimulus check, like its predecessors, was primarily determined by a taxpayer’s Adjusted Gross Income (AGI) from their most recently filed tax return (either 2019 or 2020). For married couples filing jointly, the AGI thresholds were as follows:
- Full Payment: Married couples filing jointly with an AGI of $150,000 or less were eligible to receive the full $2,800 ($1,400 for each spouse), plus an additional $1,400 for each eligible dependent.
- Phase-Out Range: The payment began to phase out for joint filers with an AGI above $150,000. The payment amount was reduced by $28 for every $1,000 (or fraction thereof) their AGI exceeded the $150,000 threshold.
- Complete Phase-Out: The payment completely phased out for married couples filing jointly with an AGI of $160,000 or more. This phase-out range was much steeper and narrower than in previous rounds, meaning that many higher-income earners who received the first two checks might not have qualified for the third.
Example:
A married couple filing jointly with an AGI of $155,000 and two eligible dependents would have their payment reduced. Their AGI is $5,000 over the $150,000 threshold.
Reduction = ($5,000 / $1,000) $28 = 5 $28 = $140.
Full payment for two adults and two dependents = (2 $1,400) + (2 $1,400) = $2,800 + $2,800 = $5,600.
Received payment = $5,600 – $140 = $5,460.
It was crucial for married couples to consider their combined AGI, as this single figure determined their eligibility for the entire household payment.
Counting Dependents: A Game Changer for Families
One of the most significant enhancements of the third stimulus check was the expansion of dependent eligibility. Unlike the first two checks, which limited additional payments to qualifying children under 17, the third check provided an extra $1,400 for all dependents claimed on a tax return, regardless of age. This included:
- Children aged 17 and older.
- College students.
- Elderly relatives.
- Other qualifying relatives.
For married couples filing jointly, this meant a potentially much larger payment, particularly for those supporting multiple generations or older children still living at home. A couple with two minor children and one dependent college student, for example, would be eligible for $2,800 (for themselves) + $1,400 (for child 1) + $1,400 (for child 2) + $1,400 (for college student) = a total of $7,000, assuming they met the AGI requirements.
The "Look-Back" Year Dilemma and "Plus-Up" Payments
The IRS primarily used a taxpayer’s 2019 tax return to determine eligibility and payment amounts if their 2020 return had not yet been processed. However, if a married couple’s financial situation changed significantly between 2019 and 2020 (e.g., a decrease in income, the birth of a new child, or acquiring a new dependent), their 2020 tax return might have qualified them for a larger payment.
To address this, the IRS implemented "plus-up" payments. If a married couple initially received a payment based on their 2019 AGI, but their subsequently processed 2020 tax return showed a lower AGI or additional dependents that qualified them for more money, the IRS automatically sent them a supplemental "plus-up" payment. This ensured that eligible couples received the full amount they were entitled to based on their most recent financial situation.
For married couples who had a significant income drop in 2020 or added a new dependent that year, filing their 2020 tax return promptly was key to ensuring they received their full entitlement, either initially or via a plus-up payment.
How Payments Were Distributed to Joint Filers
The IRS leveraged existing payment information to distribute the third stimulus checks. The primary methods included:
- Direct Deposit: The fastest and most common method. If the IRS had current bank account information from a couple’s 2019 or 2020 tax return, the payment was directly deposited.
- Paper Check: If direct deposit information was not available or valid, a paper check was mailed to the address on file with the IRS.
- Debit Card (EIP Card): Some payments were sent via a prepaid debit card, often in a plain white envelope, which was sometimes mistaken for junk mail.
Married couples could track the status of their payment using the IRS "Get My Payment" tool on the IRS website. This tool allowed them to see if their payment had been scheduled, the method of delivery, and the bank account or mailing address used.
What if You Didn’t Receive Your Payment? The Recovery Rebate Credit (RRC)
Despite the IRS’s best efforts, some eligible married couples may not have received their third stimulus check, or they may have received less than they were entitled to. Common reasons included:
- Changes in address.
- Issues with bank account information.
- Not filing taxes for 2019 or 2020.
- Income changes or new dependents that weren’t captured by the IRS’s initial review.
For married couples in this situation, the solution was to claim the Recovery Rebate Credit (RRC) on their 2021 federal income tax return. The RRC effectively allowed taxpayers to reconcile any missing stimulus money from the third round.
When filing their 2021 return, married couples would calculate their eligibility for the third stimulus check based on their 2021 AGI and dependents. If the amount they were due was more than what they received (or if they received nothing), the difference would be added to their tax refund or reduce their tax liability. It was crucial to keep IRS Notice 1444-C (confirming receipt of the third stimulus) for accurate reconciliation.
Special Scenarios for Married Couples
Several unique situations could affect a married couple’s stimulus payment:
- Mixed-Status Families: Generally, for a married couple filing jointly to be eligible for the payment, both spouses needed a Social Security Number (SSN). However, if one spouse had an SSN and the other had an Individual Taxpayer Identification Number (ITIN), the SSN-holding spouse and any qualifying dependents with SSNs or Adoption Taxpayer Identification Numbers (ATINs) could still be eligible for their respective portions. The "married filing jointly" rule for eligibility was critical here.
- Death of a Spouse: If a spouse died in 2021 after the stimulus payment was issued based on a joint return, the surviving spouse was generally allowed to keep the entire payment. However, if the payment was issued after the spouse’s death based on a joint return, the portion for the deceased individual should have been returned to the IRS.
- Divorce in 2021: If a couple received a joint stimulus payment based on their 2019 or 2020 joint return, but then divorced in 2021, they generally did not need to return any of the payment. When filing their 2021 taxes as "Single" or "Head of Household," they would reconcile their stimulus amount based on their individual eligibility.
- New Marriage in 2021: If two individuals married in 2021 and had previously received stimulus payments as single filers, they generally did not need to return any of the money. Their eligibility for the third stimulus would be reconciled on their 2021 joint return based on their new combined AGI and dependent status. If their new combined AGI qualified them for more, they could claim the difference via the RRC.
- Non-Filers and Social Security Recipients: Married couples who did not typically file tax returns (e.g., those receiving Social Security benefits, SSI, VA benefits, or Railroad Retirement benefits) generally received their third stimulus payment automatically through the same method as their other federal benefits.
Financial Impact and Purpose
The third stimulus check, particularly for married couples who received the full amount, provided a substantial financial injection. For many, it served as a lifeline, helping to cover essential expenses like rent, utilities, food, or medical bills. For others, it allowed them to pay down debt, bolster savings, or make necessary purchases, thereby stimulating local and national economies. The expanded dependent eligibility ensured that families with multiple children or elderly dependents received more comprehensive support, acknowledging the higher financial burden they often carried.
Key Takeaways for Married Filing Jointly
- Higher Payment Amounts: $1,400 per spouse and $1,400 per all dependents.
- Stricter AGI Phase-Out: Full payment up to $150,000 AGI, completely phased out at $160,000 AGI.
- "Look-Back" Year and "Plus-Up" Payments: Eligibility based on 2019 or 2020 AGI, with automatic adjustments if 2020 improved eligibility.
- Recovery Rebate Credit (RRC): If you missed out or received less than you were due, claim it on your 2021 tax return.
- Track Your Payment: Use the IRS "Get My Payment" tool.
- Keep Records: Retain IRS Notice 1444-C for your tax records.
Conclusion
The third stimulus check under the American Rescue Plan Act of 2021 represented a critical component of the nation’s pandemic relief efforts. For married couples filing jointly, understanding the specific income thresholds, expanded dependent eligibility, and the mechanisms for receiving or reconciling payments was essential to maximizing this financial support. While the immediate impact of these payments has largely passed, their legacy continues to resonate in the economic recovery and the ongoing discussion about direct aid.
For any specific questions or complex scenarios regarding your third stimulus payment, especially if you believe you are owed money, consulting a qualified tax professional or utilizing the official IRS resources remains the best course of action.