Facts You Should Know About the Third Economic Impact Payment For Your 2021 Tax Filing

January 1st, 2022 at 3:43 PM

The third round of Economic Impact Payments was authorized by the American Rescue Plan Act of 2021 as an advance payment of the tax year 2021 Recovery Rebate Credit.

The IRS started sending the third Economic Impact Payments to eligible individuals in March 2021 and continued sending payments throughout the year, as tax returns were processed.

By law, all third Economic Impact Payments (EIC) must be issued by December 31, 2021.

You may be eligible to claim a Recovery Rebate Credit on your 2021 federal return if you did not get a EIC or received less than than full amount.

Eligibility

Most eligible individuals did ot need to take additional action to get the 3rd EIC payment.

Generally, you were eligible to receive the full amount if

are a US citizen or US resident alien
are not a dependent of another taxpayer
had adjusted gross income--$150,000 if married & filing a joint return, @112,500 if filing as single or head of household, or $75,000 for any other status

Payments were phased out or reduced above the adjusted gross income limits above; and totally phased out at $160,000 for married filing jointly, $120,000 for single filers; and $80,000 for others.

Amount of Third EIC

$1400 for an eligible individual with valid SSN--$2800 for married couples filing jointly
AND--$1400 for EACH qualifying dependent with a valid SSN

Most eligible individuals received their 3 EIC automatically; the iRS used available information to determine your eligibilty for those who

filed a 2020 tax return
filed a 2019 tax return if the 2020 had not been submitted or processed yet
did not file 2019 or 2020 tax returns but registered for the 1st EIC with the non-filers tool for 2020
registered through the 2021 Child Tax credit for non-filer sign-up Tool
are federal benefit recipients who usually did not file a tax return

As a final note, the third EIC differs from the earlier payments in that the

Income phaseout limits are different
Payment amounts are different--for example a married couple with 2 dependents would receive $5600
Definition of qualifying dependent changed to include children over 17 & older relatives, parents and grandparents

Mark S. Fineberg, CPA