- While everyone waits to get the official word that new stimulus checks are coming soon, there’s an important update to be aware of regarding their connection to your latest tax return.
- Filing your 2020 tax return too soon might actually hurt your chances of getting the full $1,400 stimulus check amount.
- That’s because income is what determines the stimulus check eligibility.
Tax season is now squarely upon us, which means the race is on to get your 2020 tax return prepared, finalized, and submitted to the IRS in advance of this year’s April 15 deadline. However, the tax agency has said it’s extending that deadline for Texas residents because of the brutal winter weather there that, among other things, left many without power for days and even contributed to several deaths. Texans now have until June 15 to get their 2020 tax return submitted, a deadline extension that will also be afforded to other states where FEMA likewise issued disaster declarations because of the winter storms.
Meanwhile, as you’re getting your tax return squared away it might also be helpful to keep in mind a seemingly unrelated item that’s actually very connected to it: Your new stimulus check, the one coming very soon, likely in the amount of $1,400, from the Biden administration.
Many people like to file their taxes as early as possible, get it out of the way, and get the ball rolling on their tax refund coming sooner rather than later. This year, however, doing so might actually hurt your chances to get the full $1,400 stimulus check coming as a result of Biden’s $1.9 trillion economic stimulus legislation. Here’s why:
Eligibility for the full stimulus check amount, or a phased-out version of it, will almost surely be income-dependent — we say “almost,” only because the language of the $1.9 trillion stimulus package has not been finalized yet. The IRS is the agency sending out these checks, and it will be the IRS checking your most recent tax return to decide how big your next stimulus check will be.
The issue here, as we’ve explained in the past, is over which year’s financial picture you want the IRS to have when the tax agency makes its decision about your new stimulus check. Right now, the IRS has your 2019 tax information on file. Compare that, however, to the following year, 2020, when the coronavirus pandemic ravaged people’s lives and incomes last year. Did the pandemic leave you better or worse off, financially?
If your tax/financial situation actually improved in 2020, it would behoove you to wait and hopefully let the stimulus checks be sent out first (with the IRS basing your amount off your 2019 information), before filing your 2020 taxes. However, if you had a child in 2020, if you got married in 2020 (if your incomes combined come in below the $150,000 threshold), or if you could be claimed as a dependent on someone’s 2019 tax return, but not their 2020 tax return, you’ll want to hurry up and file your taxes.
Again, because your income is what’s used to determine your eligibility for the new stimulus checks, just remember that will be determined by the most recent tax data the IRS has on file for you.