Third incentive check: will it be based on 2019 or 2020 taxes? – Community News
Stimulus Check

Third incentive check: will it be based on 2019 or 2020 taxes?

There are pros and cons to filing your taxes now or delaying it for a few more weeks in terms of the $1,400 incentive payments proposal.

WASHINGTON — As Democrats continue to draft the next massive economic aid package for the coronavirus, key details surrounding the third stimulus check are coming into focus.

Taxes will get huge in determining who gets money from the third round of economic impact payments. The first two coronavirus stimulus checks were linked to tax returns, and it’s recommended that you file your 2020 taxes as early as possible.

It is important to remember that there may still be changes to the stimulus package before it is passed by the House and Senate. Thus, the following information is based on the parts of the COVID-19 relief plan that have been approved by House committees to date.

Will the third incentive be linked to my 2019 or 2020 tax return?

As of mid-February, the country was still waiting for lawmakers to iron out some of these details, but the fundamental answer to the question depends on how quickly you get your tax returns this year.

House Speaker Nancy Pelosi has said the goal is to have a COVID relief package on Biden’s desk by March 14. That’s the deadline for when unemployment benefits begin to expire.

That date will also affect the next round of stimulus payments, as it will be the middle of tax filing season, which began February 12 and will run through April 15.

Under the current bill, the IRS would go with the most current return they have. If taxes are filed for 2020 at that time, they will be used with the address, amount, and payout method registered by the taxpayer agency.

How much is the next stimulus check expected to be?

As of Feb. 15, language in the House Ways and Means Committee’s “Promoting Economic Security” text would send $1,400 as a refundable tax credit.

Someone who individually files a return and earns up to $75,000 will get the full $1,400. Under the current proposal, the amount for the third stimulus check would be reduced to zero at $100,000. Couples who apply jointly will receive a total of $2,800 if they earn $150,000. It would be scaled down again to zero at $200,000 collectively. But as of mid-February, these figures are not yet fixed and the threshold when passing the final settlement can be lowered.

That’s why the timing of your tax return is critical. If you went above the threshold in 2019 but fell below it in 2020, you’ll want to file your tax returns as soon as possible to get the full incentive benefit. But if the opposite is true — if you made it above the threshold in 2020 but below it in 2019 — you may want to hold off a little longer.

But what if you had a baby in 2020? The House Ways and Means Committee proposal gives $1,400 for each dependent. So if you welcomed a child in 2020, but your incentive payment will be deducted from your taxes in 2019, you may be missing out if you wait to file your return.

Under the current plan, if the third stimulus payment amount you receive is ultimately based on your 2019 taxes, but you should have gotten more based on your 2020 taxes, you can claim the difference on your 2021 tax returns. can you wait long.

Why else would I have to file my 2020 tax return earlier?

If you haven’t filed direct deposit information with the IRS, filing your taxes will help you set that up. You’ll probably get your stimulus payment faster via direct deposit than waiting for a physical check in the mail.

Incentive aside, getting your 2020 refund early means you’ll get your refund back sooner if you have one. The IRS says those who file their returns online and apply for direct deposit will generally get their refunds back within 21 days.

Another reason to get your taxes in sooner rather than later is security. Hackers and scammers may be able to claim your refund sooner if they get their hands on your personal information, including your Social Security number.

What if I did not receive a first or second stimulus check?

The IRS will also pay out past economic payments during this time. The agency has a tool on its website that allows taxpayers to claim they are still owed.

If your first or second stimulus check never arrived, the IRS says to go to the Recovery Rebate system. First, you must file your 2020 tax return, even if you are not required to file a return. Then you need to know what amount you owed.

You can find the Recovery Rebate Credit worksheet here on the IRS website for more information about applying for and claiming your impact payout money.

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