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One of the key provisions in the spending package is direct cash payments that will be made to eligible taxpayers – based on their adjusted gross income.
The payments are expected to be $1,200 per adult for those with adjusted gross incomes of up to $75,000. The threshold for married couples is $150,000, who are eligible for $2,400 and $500 per child.
The phase-out rate is $5 for every $100 above that threshold.
The benefit phases out entirely for those earning more than $99,000, or $146,500 for heads of household with one child and $198,000 for joint filers without children.
But what exactly is adjusted gross income, or AGI?
According to the IRS, AGI is defined as gross income minus adjustments to income – or some payments that can be excluded.
Gross income refers to your wages, business income, tips, retirement income, capital gains and other forms of income.
Adjustments to that income include things like student loan interest, educator expenses, alimony payments, penalty for early withdrawal of savings, contributions to a health savings account and contributions to a retirement account, among other items.
That means, your AGI will always be equal to, or lower than, your gross income, which will typically be good news for people wondering where they fall on the stimulus check spectrum.
Your AGI can be found on your Form 1040, which is where the IRS will look when determining whether you are owed money under the new proposal – and how much. If you have filed your 2019 returns, the IRS will defer to those documents first. If you have yet to file this year, the agency will check your 2018 return. If you have filed neither, and were supposed to, the IRS is urging you to do so as soon as possible in order to receive your payment.
On Friday, Treasury Secretary Steven Mnuchin said the first direct deposit payments would hit taxpayer accounts in three weeks, on April 17. It is believed that those without direct deposit accounts set up may have to wait a bit longer.