Included in the $1.9 trillion American Rescue Plan (ARP) are special Recovery Rebates that provide additional financial relief to those who are eligible. If you did not qualify for a stimulus payment in 2020, you may be eligible for these rebates based on your 2021 income. 

 About the “Recovery Rebate” Stimulus

A $1,400 stimulus payment will be made to taxpayers and each of their dependents with adjusted gross income (AGI) that falls within the following ranges:

  • Married filing joint: 100% stimulus if AGI below $150,000; phased-out payment if AGI between $150,000 & $160,000; $0 if over $160,000
  • Single filers: 100% if AGI below $75,000; phased-out if between $75,000 & $80,000; $0 if over $80,000
  • Head of Household: 100% if under $112,500; phased-out if between $112,500 & $120,000; $0 if over $120,000

Unlike the 2020 stimulus, the ARP “dependent” definition includes children over age 17 and others who are financially dependent on the taxpayer (all must be claimed as dependents on the 2021 tax return).

The stimulus payment is unlimited for those who qualify. For example, if you are married and file jointly, have three dependent children, and a dependent parent, your stimulus payment would be $8,400 (6 x $1,400).  

If, however, your AGI is between $150,000 and $160,000, your payment will be reduced by approximately 10% for each $1,000 over $150,000. (i.e., $155,000 of AGI would result in a total stimulus payment of $4,200.) Note that if your AGI is $1 greater than $160,000, you will not receive any payment.

The stimulus calculation is based on income reported on either your 2019 or 2020 tax return. Payment will be made via direct deposit, check, or debit card. Stimulus income is not taxable.

When to File Your 2020 Return

The 2020 tax filing deadline has been pushed back to May 17. If your 2020 AGI is lower than 2019’s and is within the range for stimulus, file your 2020 return as soon as possible. If your 2019 AGI is lower than 2020’s, wait to file your 2020 return until you have the stimulus check in hand or closer to the May 17 deadline.  

2021 Tax Credit

Here’s another twist. If you aren’t eligible for the full stimulus based on your 2019 and 2020 tax filing but are within range of the AGI qualification, you might be able to earn a Recovery Rebate with your 2021 tax filing.

There are three checkpoints for eligibility:

  • Checkpoint 1: 2019 and 2020 tax returns filed, and you received the full stimulus, i.e. your AGI was less than the lower end of the phase-out range. No need to consider Checkpoints 2 and 3. You aren’t eligible for any additional rebate when filing your 2021 tax return. 
  • Checkpoint 2: If you’ve filed your 2019 return, but you have not yet filed 2020, and have already received a phased-out portion of the ARP stimulus based on your 2019 AGI (or no stimulus), you could receive an additional rebate if your 2020 AGI is lower than that in 2019. If this is the case, file your 2020 return before September 1 to qualify (the Additional Payment Determination Date “APDD”). Don’t wait until the October 15th extension deadline – you’ll miss out!
  • Checkpoint 3: If your 2020 AGI was larger than 2019 or you didn’t file your 2020 return before September 1, and your 2021 AGI is less than the upper threshold of the qualifying range, you will be eligible for a rebate for the difference via a tax credit when filing your 2021 return.

How to Lower Your AGI in 2021

Did you make it to Checkpoint 3? If so, and you project your 2021 income to fall within or slightly above the upper end of the Recovery Rebate threshold, consider the following strategies for reducing AGI this year:

  • Increase pre-tax retirement plan and/or health savings account contributions.
  • Make a deductible IRA contribution.
  • Postpone Roth conversions to future years. 

Remember, just $1 more than the high end of the specified income range can entirely negate any rebate. Reducing your adjusted gross income using the strategies above could ensure your rebate eligibility while not costing you a dime.  


More than ever, it is a critical time to be strategic with 2020 tax filing and 2021 tax planning. One day late, or one dollar too much, could cost you thousands.

Kathy Hower is a Senior Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at or email Kathy at

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