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When is the tax deadline?
The deadline to file and pay 2020 taxes has been extended until July 19, 2021.
Should I file now?
Late last week, Congress approved a record-breaking $2 trillion stimulus package. If you have not yet updated yourself about the new package, check out the full funding breakdown from Politico. A massive part of this stimulus package allocates money to taxpayers in order to boost the economy. Eligibility will be based on 2020 and 2021 tax returns, depending on the latest year filed.
The bipartisan stimulus package will send $1,200 to taxpayers making less than $75,000 ($2,400 for married taxpayers making less than $150,000) and an additional $500 per child under age seventeen. For Head of Household filers, the income limit surges to $112,500. After the initial income threshold, the $1,200 benefit will diminish at a rate of $5 per $100. This calculator can help shed some light on the potential stimulus benefits for taxpayers. The income level will be based filed 2020 or 2019 tax returns, or eligible Social Security payments. In order to receive the payments, the taxpayer must also have a Social Security Number. This means undocumented workers are ineligible to claim the stimulus check. For filers who have used direct deposit for either of the aforementioned tax years, their stimulus check will arrive via direct deposit sometime in April. Taxpayers will have to wait longer in order to receive their disbursements in the form of a live check.
1. Is this rebate counted as income for 2020? No, the rebate is treated as a fully refundable credit such as the Earned Income Tax Credit and cannot be considered as income.
2. Is there a qualified income requirement? No, there is no income requirement. So long as the other qualifications are met, taxpayers with $0 in income will still receive their rebate check.
3. What if I don’t get the stimulus payment or did not get the full benefit of the credit? Due to the unique structure of this rebate as an advance on a tax credit that can be claimed on the 2020 tax return, you’ll be able to claim any differences on the credit on the 2020 return.
4. Are college students eligible? If the student made under the threshold amount; has a Social Security Number; and cannot be claimed as a dependent under someone else’s tax return, then they are eligible for the rebate.
5. Will this rebate be counted against any outstanding back taxes? No, this rebate supersedes nearly all past debts so if you owe back taxes, you’ll still receive your full rebate amount.
6. When will I get my check? According to Treasury Secretary Steve Mnuchin, the first stimulus payments will be distributed within three weeks. Depending on the complexity of the disbursements, the payments may take longer than the three-week timeline.
What Should Taxpayers Do Now?
Many taxpayers have experienced varying levels of anxiety regarding the news of the stimulus package, and meeting criteria that allows the full extent of the payment. Luckily, if taxpayers have already filed their 2020 tax return, they will not need to do anything else as the refund check will be processed with all the necessary information. If you have not yet filed for 2020 but have filed for 2019, you do not have to file for 2020 to claim the rebate unless your 2020 return would create a more favorable rebate situation. In addition, taxpayers can check for updates from the IRS to find out more on what to expect on this fast-moving process. Finally, please be sure to keep yourself up-to-date on the FTC's guidelines on the latest scams targeted around the COVID-19 crisis.
*Thank you to Prosperity Now for this information!