Dave Ramsey: Biden's plan for a third stimulus check -- and my advice if you get one

If Congress approves a third stimulus payment, things will probably move quickly

Most Americans received their second stimulus checks from the U.S. Treasury in early January. This was just before then-President-Elect Joe Biden unveiled his $1.9 trillion American Rescue Plan, which includes a third stimulus payment.

Now that President Biden has officially been sworn into office, should you keep an eye on your account for a third check? Not yet. While there’s been support from many politicians for additional direct payments to taxpayers, a third stimulus check hasn’t been approved.

Biden has proposed a $1,400 per person ($2,800 per couple) direct payment in the third round of stimulus checks to top off the $600 payment most have already received. It’s just one part of a larger COVID-19 relief plan that also expands certain income tax credits, extends unemployment benefits for people who have lost their jobs during the COVID-19 pandemic, and provides additional assistance for renters and landlords.

Eligibility and More

Congressional leaders said they’ll make the president’s plan a priority, but it has plenty of hurdles to jump before you can expect to see any more money hit your bank account. It won’t be easy for the plan to win approval, because some in Congress aren’t wild about the idea of spending another $1.9 trillion (yes, trillion!) on top of the $900 billion in COVID-19 relief they just passed. You can expect a lot of debate on Capitol Hill as politicians try to work out a deal.


Right now, we don’t know if a third stimulus check will come with changes in eligibility based on income. For the last two stimulus payments, single taxpayers earning up to $75,000 a year and couples earning up to $150,000 a year (based on 2019 tax returns) were eligible for the full amount. Parents also received stimulus payments for each dependent child under age 17.

This time around, Biden’s proposal for the third stimulus check would expand dependent eligibility to anyone over age 17. That means those who support certain eligible dependents over the age of 17 might receive additional money.

If Congress approves a third stimulus payment, things will probably move quickly, just like they did with the second round of payments.

The IRS and U.S. Treasury began sending out the second stimulus checks by direct deposit just a couple of days after President Trump signed the last bill. Those payments were automatic for anyone who filed a 2019 tax return and/or receives Social Security benefits. But if you don’t have direct deposit with the IRS, your payment would come as a check or debit card in the mail.

Using a Third Stimulus Check Wisely

It’s always nice to get an unexpected boost in your checking account balance, but don’t take for granted that another check is coming. It’s not a done deal yet. But if you do get a check, how should you use it?


If you’re out of work or missing a paycheck, you should use this stimulus money to protect your Four Walls – food, shelter, utilities and transportation. Focusing on necessities will give you a little peace of mind as you keep looking for work or are trying to get your income back up. That means if you’re working the Baby Steps and are out of work, press pause on your debt snowball for now and pile up as much cash as possible until you have a steady income again. Then, you can go back and attack your debt.

But if your job is safe, use the stimulus money to build momentum on your current Baby Step. Put your debt snowball into overdrive, knock out your fully-funded emergency fund, or talk to your investment professional about giving retirement a boost.


Will You Have to Pay Back Money from a Stimulus Check?

Some people were sent stimulus checks by accident. I know – it’s hard to believe the government made a mistake, right? Here’s why you might need to send the money back:

-You make more than the income limit to receive the stimulus money.

-You were given a check for someone who has died.

-You’re a noncitizen who files taxes.

-You don’t have a Social Security number.

-You’re a nonresident alien and your spouse isn’t an American citizen.

-You’re claimed as a dependent on someone else’s tax return.

The IRS expects you to find the error and send the money back if one of these details applies to you. Just be honest and proactive!


How to Return a Paper Check You Haven't Cashed or Deposited

If you’re one of those folks who has to send the money back, here’s what to do:

-Write “VOID” on the front of the check. Don’t fold it, staple it or put a paper clip on it.

-On a sticky note or sheet of paper, write down the reason you’re sending the check back.

-Mail the check back to your local IRS office.

How to Return a Paper Check You’ve Cashed or Deposited

If you’ve already cashed or deposited the check (or it came to you via direct deposit), here’s how to return the money:

-Make a personal check or money order payable to “U.S. Treasury.”

-Write out “2020 EIP” and include either the taxpayer identification number OR Social Security number of the person whose name was on the stimulus payment.

-On a sticky note or sheet of paper, write down the reason you’re sending the check.

-Mail the check to your local IRS office (varies by state).


Focus on What’s Really Important

While a third check and many of the proposals in Biden’s plan sound like a blessing to some, it’s hard not to worry as you watch the news and hear about billions (and trillions) of dollars flying out of Washington. But remember – what goes on in your house is more important, and impacts you way more, than anything that goes on in the White House. Only you can control your money!

Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of "The Dave Ramsey Show," heard by more than 16 million listeners each week. Since 1992, Ramsey has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.