- There’s an important stimulus check update to be aware of that also involves your 2020 tax return.
- New $1,400 stimulus checks are expected to start being sent out in a few weeks. Before that happens, of course, your eligibility will have to be determined.
- The IRS will use your most recent tax return to do so, which means that if your financial situation was worse in 2020 because of the coronavirus pandemic, it would be in your interest to hurry up and file your 2020 tax return if you haven’t done so yet.
While everyone watches and waits for a final, official stimulus check update from Congress that definitively points to how much money they’ll be getting once the new round of stimulus checks has been approved, there’s already one action that people can take now which they might not even realize can affect the size of their new check.
Tax season has officially begun, and with the IRS now accepting 2020 tax returns, that means you’ve got between now and April 15 to file your federal taxes with the IRS if you haven’t done so already. If you haven’t, read on, because you also now have an important decision to make, given that when you choose to file your taxes may end up impacting how much money you get with the new round of stimulus checks from the Biden administration. Here’s why.
Eligibility for the full stimulus check amount, or a phased-out version of it, will almost surely be income-dependent. 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. But wait, you might be asking yourself — if the $1.9 trillion Biden stimulus plan funds a massive wave of $1,400 stimulus checks for most people, what does the timing of when I file my 2020 tax return have to do with this?
As Kiplinger explains, it’s all about which year’s financial picture you want the IRS to have when the tax agency makes its decision about your new stimulus check. The coronavirus pandemic, for example, ravaged people’s lives and incomes last year — people who might have been financially better off in 2019 because of that.
Accordingly, as we noted here, 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. But you should probably wait to file your 2020 tax return until the new bill is passed and checks start going out if your income was higher in 2020, if you had a death in the family in 2020, if you got divorced in 2020 (and your individual income takes you over the $75,000 threshold), or if you can’t claim your child as a dependent any longer.
“I would suggest that people file as soon as possible, especially with 75% of taxpayers last year receiving a tax refund close to $3,000,” Lisa Greene-Lewis, a tax expert at TurboTax, told CBS News. “We are hearing a lot of people say, ‘I had a baby in 2020, how will the IRS know this? When they issued the previous stimulus payment they didn’t know that.'”
Whether or not that holds true for you depends, again, on the information you want the IRS to have in order to make its decision about the size of your new check. Remember, the agency will use your most recent information, so if you were worse off in 2020, that’s why you might want to consider filing your taxes ASAP.
And if you need more help along these lines, Kiplinger has examples on its website that will guide you through each situation that applies to you and your family.
