Americans may be receiving a new stimulus check of up to $1,400 this spring to deal with the fallout of the coronavirus pandemic. But that raises a question: Should you file your taxes before or after receiving the check?
First, a look at the numbers
Before we get into the taxes, let’s look at how much money you can get based on the current stimulus check plan. According to Yahoo! Finance, here’s the breakdown of how much money you can receive from the current relief plan that’s being negotiated:
- Anyone who makes under $75,000 gets a full check.
- You will receive a lower amount if you make between $75,000 and $100,000.
- Married couples who have an income of $150,000 but under $200,000 will receive a lower amount.
- Heads of households with incomes higher than $112,500 but less than $150,000 will also see a lesser amount.
You won’t get any stimulus check right now if:
- You make $100,000 or more.
- You and your married partner make $200,000 or more.
- You’re the head of the household and make $150,000 and up.
Why you should file ASAP
All signs are pointing to filing taxes as soon as possible. Why? The IRS will use the most recent tax filing to determine whether or not you receive a full or partial stimulus check (or, depending on your wage, any check at all), according to CBS News.
So if you don’t file your 2020 tax return before the stimulus checks are sent out, the IRS will use your 2019 tax information. The 2019 number might not reflect your loses from the COVID-19 pandemic, according to CBS News.
Lisa Greene-Lewis, a tax expert at TurboTax, told CBS News: “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. 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.’”
New parents could be entitled to some extra money. People who had a child in 2020 could earn an extra $1,100 in stimulus money ($500 from the spring 2020 checks and $600 from the December 2020 checks), which they can claim on their 2020 tax returns, according to CBS News.
However ...
As Yahoo! Finance points out, some people might have had a good financial year and could benefit from waiting.
- “But as the stock market rallied last year, home prices hit record highs and essential businesses thrived, some people made more money than they did in 2019. If you’re in that fortunate group, you might want to sit on your tax return a few weeks.”
What’s next
The House Budget Committee recently approved President Joe Biden’s $1.9 trillion COVID-19 relief bill, also known as the American Rescue Plan.
The full House will likely vote on the plan by Friday. The Senate will take up the bill in March, but there remains some hiccups about the bill, as I wrote for the Deseret News