Free Money Coming Up
The latest payments are $1,400 per household member, including adults, children and adult dependents provided you are under the cutoffs.
However, there are some interesting tactics you can take to get money faster and stay under the cutoff threshold via delayed filing.
Please consider the WSJ article Who Will Get a $1,400 Payment?
How big are the payments?
The latest payments are $1,400 per household member, including adults, children and adult dependents such as college students and elderly relatives. Adult dependents were ineligible for prior rounds of payments.
Who is eligible for the stimulus checks?
Yes. Individuals with adjusted gross income up to $75,000, heads of household with AGI up to $112,500 and married couples with AGI up to $150,000 will get the full payments. Above that, the payments phase out.
What information will the IRS use to determine the size of payments?
The government will use the information it has on file from the 2020 tax return if that has been processed. It will use information from the 2019 tax return if that is the only one available to the government.
What if I qualify based on 2019 income but not on 2020 income? Can I just wait to file my tax return?
Yes. The IRS will issue payments based on 2019 data if it doesn’t have 2020 information. And the bill specifically doesn’t allow the government to take back any such payment. The payments are also not taxable income.
The numbers can get strange for some households. For example, a married couple with four children that made $160,000 in 2019 and 2020 would get no payments now. But if the same couple makes only $150,000 in 2021, it would get $8,400 on its 2021 tax return that would either shrink the taxes it owes or increase its tax refund. In addition, the couple would also get a larger child tax credit and $2,200 in income-tax savings.
Here's What to Do
- If you made more than the cutoff in 2020 but not 2019, delay your tax return. File an extension if necessary.
- If you made more than the cutoff in 2019 but not in 2020, file pronto to get your money sooner.
- If you are just over the cutoff in both years and can get under it in 2020 by making an IRA contribution or other means, do so.
- If you have a business and are near the cutoff look for legal ways to defer income until next year or depreciate more items this year.
- If you already filed but have a way to file an amended return to get under the cutoff, then do so.
That represents what passed in the Senate. It is remotely possible for the House to amend the bill and it would return to the Senate where literally anything could happen.
However, Biden has urged passage as is and that is widely expected.