AMERICAN RESCUE PLAN

Does getting a third stimulus check affect the new unemployment benefits?

The American Rescue Plan Act enacted in March will extend unemployment benefits through Labor Day and send $1,400 stimulus checks to eligible recipients.

Does getting a third stimulus check affect the new unemployment benefits?
ERIC BARADAT AFP

The covid-19 pandemic and economic crisis that ensued has been going on for over a year now. To ease the pain being felt by many households across the country Democrats passed the American Rescue Plan Act (ARPA) which will provide $1.9 trillion in covid-19 relief.

Some key measures in the bill that will help American households are extended unemployment compensation and expanded tax provisions, including $1,400 stimulus payments to eligible recipients. With the US economy still missing 9 million jobs that existed before the pandemic many Americans will be looking to take advantage of both.

If I receive a third stimulus check will that affect my unemployment benefits?

The two provisions in the pandemic relief bill are not mutually exclusive, just because you receive one does not mean you can’t receive the other. In many cases both will be necessary to shore up the finances of households across the nation. However, depending on which year's adjusted gross income (AGI) the Internal Revenue Service (IRS) uses to calculate a possible third stimulus check for your household, it may affect whether you get one or not.

The direct stimulus payments aren’t income, so they will not affect your AGI, but instead are a refundable tax credit for 2021 paid in advance. The IRS will use income tax returns from either 2019 or 2020, whichever they have on file when the agency processes your payment, to calculate the amount you get, or not, from the third round of stimulus payments.

But if you become newly eligible for a stimulus payment due to your income in 2021, you will probably have to wait until you file your 2021 tax return to claim the money due to you through the Recovery Rebate Credit. The IRS has said that the third stimulus payments will go out throughout 2021 and the agency has provided an online Get My Payment tool to check the status of your Economic Impact Payment.

Will my unemployment benefits affect my receiving a third stimulus check?

In order to receive a third stimulus check you must meet the income eligibility requirements which were tightened for the third round. Receiving unemployment compensation does not automatically make you ineligible for a $1,400 stimulus check, only in the event that you brought home enough money from unemployment and income from your previous job to make you ineligible.

The maximum weekly unemployment payments across the US are fairly low averaging a little less than $500 per week or on average 45% of an individual’s income. Through the CARES Act, the federal government gave unemployment compensation a boost with an extra $600 in weekly payments until the end of July, 2020. Under the ARPA those weekly top-up payments to jobless aid were continued at $300 per week, the same as from the December covid-19 relief bill.

Anyone who is receiving payments from their regular state unemployment insurance or extended benefits will receive this bonus. As well those who are receiving benefits from the federal pandemic unemployment compensation programs will too. The federal programs have been extended until 6 September. They include:

  • Mixed-Earner Unemployment Compensation that provides an extra $100 per week for those whose income is a mix of self-employed, 1099 income, and wages paid by their employer, W-2 income.
  • Pandemic Unemployment Assistance (PUA) program, which covers the self-employed, gig workers, part-timers and others who are not able to receive regular state unemployment benefits.
  • Pandemic Emergency Unemployment Compensation (PEUC) for the long term out of work.

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