22 Jul Can I get third stimulus because of the unemployment tax break?
Q. I was ineligible for the third stimulus payment because my 2020 adjusted gross income (AGI) was more than $83,000, but $13,050 was from unemployment. After the unemployment tax break, my AGI dropped to the $73,000 range. Should I now get the third stimulus payment?
A. You are in luck.
The IRS has given additional guidance on situations like yours.
It said on its website that if a taxpayer received either a reduced third stimulus payment or no third stimulus based on their 2020 tax return, and that return included as taxable up to $10,200 of now-exempt unemployment compensation, the IRS will issue the new amount due by direct deposit or as a paper check, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.
He said for a single taxpayer, a full $1,400 payment was issued if modified AGI was below $75,000 and was fully phased out once modified AGI reached $80,000, he said.
“Since your AGI exceeded $83,000, you were initially ineligible for a third Economic Impact Payment (EIP),” he said. “Upon your AGI dropping below $75,000, you have now become eligible for the full third EIP of $1,400.”
Just keep in mind that the IRS has a backlog as it reviews the returns of people who had unemployment income and it will continue to issue refunds as it completes more returns.
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This story was originally published on July 22, 2021.
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