Let's Talk About Plan B

The Supreme Court stole Christmas for tens of millions of student loan borrowers last June, by striking down Joe Biden’s plan to forgive  up to $20,000 of debt per student. In the majority opinion Chief Justice John Roberts wrote that the Administration had the authority to "waive or modify" the HEROS Act, but not to "rewrite that statute from the ground up."

The new "SAVE" plan (Saving on a Valuable Education) is the Administration's attempt to fashion significant loan relief while staying within the "modify" authority under the HEROS Act. Here’s what you need to know about the new plan:

Income Taxes And Your Social Security Benefit

Some of you have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

Stimulus Payments -- Round Three:  Not taxable, but amount needed for 2021 tax preparation.  If you don't accurately report the amount you received, your refund will very likely be delayed a long time, so tracking down the amount you received is important.

Round Three payments were mailed beginning March of 2021. 

Who did not qualify for 3rd round stimulus?

Generally, someone was eligible for the full amount of the third Economic Impact Payment if they:

• are a U.S. citizen or U.S. resident alien (and their spouse if filing a joint return), and
• are not a dependent of another taxpayer, and
• had adjusted gross income (AGI) that is not more than:
  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
  • $112,500 if filing as head of household or
  • $75,000 for any other filing status

Payments were phased out – or reduced – above those AGI amounts. This means people did not receive a payment if their AGI was at least:

• $160,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $120,000 if filing as head of household
• $80,000 for any other filing status

Amount of Third Economic Impact Payment

The third Economic Impact Payment amount was:

• $1,400 for an eligible individual with a valid Social Security number ($2,800 for married couples filing a joint return if both spouses have a valid Social Security number or if one spouse has a valid Social Security number and one spouse was an active member of the U.S. Armed Forces at any time during the taxable year)
• $1,400 for each qualifying dependent with a valid Social Security number or Adoption Taxpayer Identification Number issued by the IRS

Getting Your Payment

Most eligible individuals received their third Economic Impact Payment automatically and didn't need to take additional action. The IRS used available information to determine your eligibility and issue the third payment to people who:

• filed a 2020 tax return
• filed a 2019 tax return if the 2020 tax return had not been submitted or processed yet
• did not file a 2020 or 2019 tax return but registered for the first Economic Impact Payment with the Non-Filers tool in 2020
• registered through the 2021 Child Tax Credit Non-filer Sign-up Tool
• are federal benefit recipients who do not usually file a tax return.

Third Payments Differed from Previous Economic Impact Payments

The third payments differed from the earlier payments in several respects:

• Income phaseout amounts changed. Payments were reduced for individuals with adjusted gross income of more than $75,000 (or $150,000 if married filing jointly). The reduced payments ended at $80,000 for individuals and $160,000 for married filing jointly. People above these levels did not receive any payment.
• Payment amounts are different. Most families received $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents received $1,400, while married filers with two dependents received $5,600. 
• Qualifying dependents expanded. Unlike the first two payments, the third payment was not restricted to children under 17. Eligible individuals received a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.