Stimulus check formula: New details emerge about $1,400 checks that change everything

The stimulus check formula could change in more ways than one with a third payment. Here's why it matters for the size of your check.

How much money you could get in a third stimulus check for your household -- whether it's $1,400, $2,800 or $10 -- depends on a formula that the IRS will use to calculate your share based on the latest stimulus bill that Congress is working to pass.

The latest proposal (PDF) on the table would provide adults in a household a third stimulus check of up to $1,400 maximum each. It would also include an extra $1,400 for dependents of any age -- a potentially huge sum compared to the previous two checks. For example, a family of four could potentially get $5,600, versus up to $2,400 supplied by the $600 check.

The final equation determining how much money your household could get in a third check is still up in the air, however, and could potentially set hard income limits that would exclude some people who got stimulus money the first two times. Others would get a much larger payment, a much smaller payment or none at all. We'll explain more below. Meanwhile, here are the top things to know about stimulus payments right now, including what happens if a third check comes in the middle of tax season. This story is regularly updated with new information.

How the stimulus check formula determines how much money you'll get

Before we explain how the third stimulus check could change the equation and what the outcome would mean for you, here's how it works. You can qualify for a stimulus check if you're a nonfiler who doesn't pay taxes. But in general, your tax return is one of the most important factors in determining your stimulus check total. The others include your adjusted gross income, or AGI, and the stimulus check formula.

The major variables being plugged into the stimulus formula are:

• Your AGI you put on your 2019 or 2020 federal tax returns.
• Upper limits for single taxpayers, heads of household (e.g., a single person with at least one child) and married couples filing jointly.
• Number of eligible dependents you claim.
• "Reduction" or "phase-out" rate -- the amount your total would drop for every $1,000 you make above the limit to qualify for the full check. In other words, this part of the equation calculates a partial payment if you don't get the full thing.

Exactly how the third stimulus could change the equation

The recent proposal to "target" the $1,400 stimulus check would keep the highest earners from receiving a partial payment. If the proposal is adopted, the qualifications would be:

• Full $1,400 amount if you earn under $75,000 (single taxpayer); $112,500 (head of household); $150,000 (married)
• Disqualified at $100,000 (single); $150,000 (head of household); $200,000 (married)
• Phase-out rate increased to preserve this upper limit
• These high earners would not receive partial checks even if they have dependents

This major change to dependent rules is important

With the previous two stimulus checks, it was possible to get a partial payment even if you exceeded the maximum income limit -- if you had dependents. For example, let's say a married couple with an AGI of $200,000 claims two dependents. With a $1,400 stimulus check that uses the previous formula, that family could still get a $600 check.

That's because the previous formula begins with the largest amount you'd be eligible to receive (for example, $1,400 per single taxpayer or $2,800 for joint filers), and add $1,400 for each qualifying dependent. Then it reduces the total possible sum according to your AGI and the phase-out rate.

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

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 get more than people who don't have dependents -- even if your AGI is above the maximum cap. The more child dependents you have, the higher your starting value and the higher your ending value, too.

The proposal to target stimulus checks would set a firm cutoff, which means that it would start by evaluating your AGI. If you're over the limit, it wouldn't matter how many dependents you have. You still wouldn't be eligible for a check.

On the other hand, a family with a large number of dependents and an AGI within the boundaries could still potentially receive a large partial payment, as long as they come in below that absolute upper income limit. You can experiment with our stimulus calculator.

Phase-outs and reduction rates: What to know

A sliding scale is involved here. With the second check, for example, if your AGI was less than $75,000 as a single taxpayer (that means no kids), you would receive the entire stimulus check total of $600. If you made more than that, the size of your check would diminish until $87,000, after which point you'd be ineligible.

For the $1,400 stimulus check -- note this could still change -- you might receive the full $1,400 amount if you earn under $75,000 a year (your AGI as a single taxpayer), with diminishing returns up until a $100,000 cutoff. You'd receive a partial check for an AGI between $75,000 and $99,900. Again, you can see the differences in our $1,400 stimulus check calculators.

For heads of households and married couples with dependents, these other household members are an important part of the equation -- up to a point (see above).

For more information, here are the top things to know about stimulus checks. 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 could also qualify, including families with mixed-status citizenship.