Stimulus check formula decoded: How the IRS calculates your total payment amount - CNET

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Do you know how the IRS tabulates your stimulus check money? It isn't easy.

Angela Lang/CNET

For now, we wait for Congress to decide what will happen to the latest stimulus proposal and whether or not a second stimulus check will work its way in by the time negotiations are through. In the meantime, we can pick our way through the IRS' method for calculating how much stimulus money qualified individuals could get in the first round of payments. 

A same or a similar formula would likely influence the next direct payment, whenever it arrives. Even if another stimulus check doesn't come until early 2021, seeing the formula in action help reveal an error in your previous total and spur you to file a claim for a catch-up payment.

We're about to walk you through how the IRS determines payment amounts, but as an aside, our stimulus calculator can also give you a specific estimate. You'll just need to collect your AGI and know how many dependents you can claim. We'll share some some additional guidelines to for child support situations as well. This story was updated recently.

How does the IRS calculate your stimulus payment?

For most people, the answer is "your federal tax return." Specifically, the IRS starts with the adjusted gross income you put on your 2019 federal tax returns if you filed them or otherwise it looks to your 2018 returns. (If you don't typically file taxes, here's what you need to know.)

If you're an individual US citizen, head of a household or part of a married couple filing jointly, the most money you could make in a year (your AGI) and still get a check looked something like this, according to the CARES Act:

• $99,000 for eligible individuals (up to $1,200)
• $136,500 for head of household filers (up to $1,200)
• $198,000 for married couples filing joint returns (up to $2,400)

But there are two important facts that change things: First, at a certain "income cap," the IRS reduces the total you can get by $1 for each $20 of income you have over the cap. So if you're a single person filing alone and your AGI is less than $75,000, you'd likely get the full $1,200. As your AGI goes up, your check gets smaller.

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Second, these numbers don't factor in child dependents. The IRS would include a $500 payment for each qualifying child 16 years or younger that you claimed on your tax return, which means you could still get more -- or less -- than the per-person or per-couple limit depending on your income.

When the IRS put it all together for the first payment authorized as part of the CARES Act in March, the agency started with the largest amount you'd be eligible to receive ($1,200 per single taxpayer or $2,400 for joint filers), added $500 for each qualifying child and then reduced the total possible sum according to your AGI.

It's a little like starting a test with a perfect 100 points and subtracting every point you "miss," rather than starting with zero points and adding them all up at the end of the test.

Washington continues to work on the details or a new stimulus package.

Angela Lang/CNET

But in this case, the dependents you name can start you at a higher value, say 110 points in our classroom example. So by the time you subtract "points," you may still have more than people who don't have dependents, even if your AGI is high.

That's why it's possible you could be out of range for a payment based on your AGI and still receive a check for eligible dependents. Still confused? We don't blame you. Maybe these scenarios will help ballpark how much you could get. Also see below for even more sums.

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I have children. How does the stimulus check formula work for your family?

Here, we want to show you the calculation at work, and how the math changes for people who claim dependents. 

Remember that an individual can qualify for a stimulus check of up to $1,200, a married couple who file taxes jointly can get up to $2,400 -- and the first check threw in an extra $500 per qualified child dependent. Note that a head of household is someone who files taxes individually and has at least one dependent. People who are considered single filers claim no dependents on their taxes, only themselves, which is why this group isn't included in the chart below. 

These figures are based on the rules set out for the first check, worked out using CNET's stimulus check calculator. They don't include variables for a second check and are estimates only. There are a lot of secondary qualifications that could determine your final sum. If the amount below looks higher than what you received, though, you may need to investigate a catch-up payment from the IRS for dependents who were skipped in the first check.

Stimulus check calculations with dependents (first check)

	Head of household	Married couple, filing jointly
Estimated total with:
AGI of $40,000 and no dependents	$1,200	$2,400
AGI of $115,000 and no dependents	$1,075	$2,400
AGI of $200,000 and no dependents	Not eligible	Not eligible
AGI of $40,000 and 1 dependent	$1,700	$2,900
AGI of $115,000 and 1 dependent	$1,575	$2,900
AGI of $200,000 and 1 dependent	Not eligible	$400
AGI of $40,000 and 2 dependents	$2,200	$3,400
AGI of $115,000 and 2 dependents	$2,075	$3,400
AGI of $200,000 and 2 dependents	Not eligible	$900

What does this all mean for your second direct payment?

If Congress does approve a new economic stimulus package with a second round of checks -- either this year or in 2021 -- the size of your payment could largely depend on any new rules that affect dependents, even if the $1,200 and $2,400 caps stay the same. (There's also a new proposal to bring adults and children $600 apiece.)

For example, earlier this year Congress considered at least two proposals that would have cast a wider net for dependents. One would allot more money for children (for example, $1,000 instead of $500), and the other would allow more people to be considered dependents (including $500 for college students and older parents who live with you). 

Both would have potentially increased your family's overall pool. Remember, the bigger the sum a family starts with, the bigger the check they are likely to receive after the IRS makes its deductions based on your AGI. 

Again, here's a comparison of what the difference could look like for some families -- with varying AGIs and types of dependents -- if the rules change one of two ways. In that guide we also explain different ways you could see more, or even less, money on a second check.

For now we're keeping our eyes on Washington. For more information, here's how to determine if you'd receive your check before or after other people. And see how SSDI recipients and checks, older adults and retirees and people who aren't US citizens or Americans who don't live in the US can also qualify.

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