How your 2020 taxes could affect the size of your next stimulus check
If another stimulus bill is close to the tax season's entry into effect, filing it now or later may affect how much you will get on your next stimulus check.
If your income has decreased in 2020 compared to 2019, you should submit online immediately. However, if it increases, you can wait for the payments to be issued before filing your federal tax return.
"There is likely to be an advantage if your 2020 income is less than your 2019 income to file your tax return immediately," said Lewis Taub, accountant and New York director of tax services at Berkowitz Pollack Brant Advisors, told Yahoo Money. "If you don't and miss the real limit, you can tell the difference between what you actually owed when you returned in 2021."
Stimulus Check: US Government Check, Payment Photo: Getty Creative
If your 2020 income was less than $ 80,000 for single applicants and $ 160,000 for joint submitters, you'd be eligible for a portion of the potential third round of $ 1,400 stimulus reviews, like from the Senate version of the $ 1.9 trillion Dollar stimulus package that passed the chamber on Saturday. The bill goes back to the House to vote on the amended version before going to the President for signature.
If you now submit your return electronically online, the Internal Revenue Service may be able to process and use it to determine your eligibility for the next payment. According to Taub, filing a paper return can take eight to ten weeks, which is not fast enough.
If you're late, you can likely claim the difference or all of your stimulus check on next year's tax return. Taxpayers can use Recovery Rebate Credit to claim any outstanding amount for the first and second economic reviews when filing their 2020 taxes.
"A situation where you shouldn't have received a stimulus payment."
If your income has risen above these thresholds, wait to file your tax return until the IRS issues the new round of payments. Otherwise, you may not be eligible for a third payment or receive a lower amount. If you wait, you can get a larger payment and not have to return it.
"You may be in a situation where you shouldn't have received any stimulus payment or a larger stimulus payment," Taub said. "If you get more than you should, you don't have to return the money." . "
But for some, withholding your taxes to help keep the economy moving may not be the best decision. If the government owes you a large refund and you need the money now, filing your taxes sooner rather than later is paramount, according to Taub.
"All kinds of factors to consider when deciding which will be the better year in order to get the largest amount of money from the third stimulus check," he said.
President Biden's $ 1.9 trillion stimulus package was passed by parliament last week and is expected to be put to the vote in the Senate this weekend. If passed, the package would go back to the House to vote on the amended version and then sent to the President for signature.
Lawmakers aim to get the package passed by March 14, when major federal unemployment programs expire and millions of Americans receive no benefits.
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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