A third stimulus check could be ‘targeted’: What to know about the $1,400 payment

When it comes to stimulus checks for COVID-19 relief, lawmakers have different opinions on what the size and scope of the help should be. The options include making them big; making them “targeted;” or making them recur for the duration of the pandemic. President Joe Biden, who seems to want a balance of the three, unveiled a $1.9 trillion stimulus package with a third stimulus check for up to $1,400shortly before being sworn into office.

“I’m open to negotiate those things,” Biden said Monday about the $1,400 stimulus check figure. “But this is all a bit of a moving target in terms of the precision with which this goes.” 

By being willing to sign a stimulus bill with a smaller third stimulus check, or one that goes to fewer people, Biden’s response could open up a discussion about how big the next stimulus check should be, or how to send it to fewer people overall. And how to do that while also working to include two new groups who didn’t qualify for the previous checks. We’ll explain why a $1,400 sum is raising hackles and some possible ways a third stimulus check could become more targeted.

Why are some lawmakers disagreeing that a $1,400 stimulus check is targeted?

The argument here is that a $1,400-per-person maximum would send millions of stimulus checks to people who are considered high earners — in addition to sending the full $1,400 upper limit to many tens of millions of people who fit into the sweet spot that Congress wants to supply with stimulus money. For the sake of simplicity, that’s single taxpayers with an adjusted gross income of $75,000 per year or less (and their equivalent for heads of household and married couples).

The reason that a $1,400 limit could send checks to people who make “too much money” comes down to the way that stimulus checks have been calculated so far. The formula was written into the respective stimulus bills in a way that provides a partial payment to people who make more than the $75,000 per year threshold (up to a certain limit). 

Looking at the formula for the $1,200, $600 and proposed $1,400 checks, it’s immediately clear how raising or lowering the per-person limit — e.g. $1,400 versus $600 — can change how many people over the $75,000 income limit would get a payment.

For example, using our $1,400 stimulus calculator, a single taxpayer making $102,900 per year could receive a stimulus check for $5. If they make $90,000, they could get $650, and with an adjusted gross income of $85,000, the Treasury would send a check for $1,150.

In contrast, a $600 stimulus maximum allots a single taxpayer with an AGI of $80,000 a stimulus check for $350. The same person who makes $86,900 a year would get only a $5 check.

The result is that, with the current formula, more people are eligible overall to receive a stimulus check of some amount, even if it’s a relatively small payment. Dependents and spouses add another layer — here’s more information, including a handy comparison chart.

What would happen if the third stimulus check is less than $1,400 maximum?

One way negotiators could send a stimulus bill to fewer people overall would be to keep the formula as is, but lower the per-person maximum from $1,400. The drop from the first $1,200 stimulus payment to the $600 second stimulus check immediately disqualified people who had otherwise qualified for the first stimulus check. Simply using a $600 base instead of $1,200 reduced the cutoff point for receiving a partial payment. 

Said another way, the smaller the per-person maximum, the sooner people who made more than $75,000 a year hit the limit for receiving any money.

With the first check, a single taxpayer — remember, no spouse or kids — could get some amount of stimulus money if they made under $99,000. With the second check, that vanishing point dropped to $87,000. The only difference in that part of the equation was the maximum per-person payment. (Separately, child dependents counted for $600 in the second check instead of $500.)

Again, here’s a deeper explanation of the stimulus check formula (especially with kids) and here’s how to calculate more variables in a possible $1,400 check.

What would happen if the stimulus calculation changes?

Changing the math in the stimulus check formula used for the first two checks would be one way to potentially limit the number of people who receive a check. Adjusting the formula so people who make over $75,000 per year would hit the vanishing point could hypothetically let lawmakers keep a $1,400 maximum payment while sending out fewer checks overall.

For example, with the current formula, a $1,400 check would give a person with an AGI of $80,000 a year a $1,150 stimulus check. An adjustment to the formula could potentially lower that figure to $800 (to pick an arbitrary number) and so on. That would effectively mean that people who are relatively high earners would get a much smaller check or none at all.

What if Congress decides to pass an arbitrary income cutoff?

Let’s say lawmakers wanted to send $1,400 to everyone who makes under $75,000 per year, but didn’t want to send money to anyone who makes $90,000 a year or above. Another hypothetical way to achieve that would be to leave the stimulus check formula as is, but create an additional cutoff that would stop the IRS and Treasury from sending checks to single taxpayers with AGIs at $90,000 or above.

Again, this is just an example, with negotiators working out specifics for married couples filing jointly, and people with dependents.

What will the qualifications be for new groups of people added?

In addition to supporting larger stimulus checks, Biden also wants to include two previously excluded groups: dependents of any age (not just children under 17) and all families with mix-status citizenship. Combined, that could potentially extend stimulus funds to nearly 20 million people who previously might not have been counted toward the family total.

If passed, the outcome would most likely be a larger stimulus check for families that previously qualified (in the case of 17-year-olds and older adult dependents), and some mixed-status families qualifying for a new check for the first time. In all cases, families would have to meet all other eligibility requirements — like an income limit — to receive a future stimulus check.

Until then, we’ll have to see how negotiations over the stimulus bill and third stimulus check develop. For more information, here’s the current timeline for a third stimulus check and here’s what to know about stimulus check qualifications. Here’s what to do if you’re missing all or part of your stimulus check.