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With more stimulus checks on the way, you may want to wait to file your taxes

When you file could impact next round of stimulus
stimulus checks
Posted at 11:24 AM, Feb 18, 2021
and last updated 2021-02-18 17:04:44-05

WASHINGTON — Congress is poised to pass legislation that would distribute another round of stimulus checks to most Americans.

The House of Representatives could vote on a bill next week and President Joe Biden wants to sign it into law by mid-March.

The checks are expected to total $1,400. The income threshold requirements that will determine who will receive those checks remain unclear.

Taxes and stimulus checks

Qualifying for a stimulus check up to this point has been based on a person's latest tax filing with the IRS. For instance, anyone who reported earning less than $75,000 in 2019 received a full stimulus check.

What Americans report on their 2020 filing will likely impact the next round of checks.

So, how should you go about filing your taxes, given that many details regarding the next stimulus bill are still up in the air? Read below on advice from experts on when to submit your taxes to maximize your return and your stimulus.

Scenario #1: You earned less in 2020 than you did in 2019

Advice: File ASAP

The reason? The lower the income, the higher the probability a person will receive a stimulus check. It's possible Congress changes the income requirements in the upcoming stimulus bill, but a lower income in 2020 will provide a better chance at a full stimulus check.

Scenario #2 You earned more in 2020 than you did in 2019

Advice: You may benefit from waiting

The reason? Taxpayers have until April 15 to file, and it's likely the next stimulus bill will be signed into law by then. Reporting a higher income will increase the chances of not getting a stimulus check. It's unclear what the new income limits will be in the next round of relief.

Scenario #3 You earned the same in 2019 and 2020

Advice: It doesn't matter when you file

The reason? Your tax information will not likely impact the next round of stimulus checks.

Scenario #4 You never received a stimulus check but know you qualify

Advice: File ASAP

The reason? The IRS is asking Americans if they actually received a stimulus check, and crediting those who qualify. Filing now will also make it easier to receive the next check.

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NEW TAX LAW

If you’re wondering how you’re affected, not to worry, we have your back. We’re doing the work to make sure our products are up to date and that you can use them to file your taxes with complete confidence.

That said, many folks are wondering what’s in the bill and how it might affect them. Here’s a recap of some of the major tax provisions in the new tax bill and how they may impact you.

Increased Standard Deduction: The new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.

Increased Child Tax Credit: For, families with children the Child Tax Credit is doubled from $1,000 per child to $2,000. In addition, the amount that is refundable grows from $1,100 to $1,400. The bill also adds a new, non-refundable credit of $500 for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000.

Personal and Dependent Exemptions: The bill eliminates the personal and dependent exemptions which were $4,050 for 2017 and increased to $4,150 in 2018. State and local taxes/Home mortgages: The bill limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax deductible. The bill also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law.

Health Care: The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out-of-pocket medical expenses can be deducted from the current law floor of 10% to 7.5% for 2017 and 2018. So for 2018, you can deduct medical expenses that are more than 7.5% of your adjusted gross income as opposed to the higher 10%.

Fastax Has You Covered

Don’t worry about memorizing these tax changes the majority of which are for 2018 taxes that you file in 2019. Fastax has you covered and will be up to date with the latest tax laws. Call us for tax help at 661 493-8512