How Submitting Taxes Early Might Maximize Your Coronavirus Stimulus Test
Filing taxes early can give you a major coronavirus stimulus review.
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February 11, 2021 3 min read
This story originally appeared on ValueWalk
Filing taxes early is a good thing as it will help you get your refund sooner if you get one. This year, however, you have one more reason to file taxes early. Filing taxes early can give you a major coronavirus stimulus review.
Coronavirus stimulus check: why it is good to file taxes early
If you’re wondering why filing taxes early is good, it’s because the size of your check depends on your AGI (Adjusted Gross Income) in 2019 or 2020. So, if your income decreased in 2020, which is most likely, then by your third The Stimulus Check could be higher.
Congress has not yet approved the third stimulus package, but it is very likely that there will be and that it will include stimulus testing. Under the House Democrats’ recent proposal, those with incomes up to $ 75,000 (and married couples earning more than $ 150,000) would qualify for the full $ 1,400 of stimulus checks ($ 2,800 for married couples).
Related: When Is Your $ 1,400 Stimulus Check Coming?
On the other hand, the check amount would be reduced for those earning more than $ 75,000. Individuals with an AGI greater than $ 100,000 per year would not receive any payments. This means that your latest AGI will play a big part in deciding the level of your stimulus check.
So for most people, filing your 2020 taxes as soon as possible will be beneficial. This year, the IRS will begin accepting tax returns on February 12th. Those who file their tax returns electronically are likely to receive their stimulus payment based on that tax return.
There is currently no timetable for when Congress will approve the next stimulus package. However, it is widely believed that the next stimulus package could be approved by mid-March. To maximize your stimulus testing, it is recommended that you file taxes this month whenever possible.
Scenarios where an early tax return is good
For example, your AGI per tax return for 2019 was $ 80,000, but due to the coronavirus pandemic, it was below $ 75,000 in 2020. If you fail to file your 2020 tax return by the time the IRS does the third stimulus reviews, you will receive payment based on your 2019 return.
This means you will receive a check for less than $ 1,400. Conversely, if you file your 2020 tax return and your AGI falls below $ 75,000, you will be eligible for the full incentive amount.
Another scenario in which filing taxes for 2020 could prove beneficial is if you are a single taxpayer who made $ 100,000 in 2019. Based on your 2019 tax return, you would not qualify for a direct payment.
However, your working hours were cut in 2020 and this reduced your AGI to $ 74,000. Now you qualify for the full stimulus check, $ 1,400.
On the flip side, those who believe their income has increased in 2020 shouldn’t rush to file their taxes as this could lower the amount or make them unfit for stimulus testing.