On Friday, February 12th, the IRS began accepting e-filed tax returns and people like us all around the country started buckling up for what is already quite a ride…
With new PPP loans for small business owners, new tax credits aplenty from the various stimulus bills, DELAYS from the IRS, fraudulent unemployment claims, etc., this is going to be an interesting tax season…
Please bear with us as we navigate these white water rapids.
One thing that’s on our radar right now, and may affect YOU, is the new stimulus plan proposed by President Biden.
This bill has not passed into law yet, but we expect that it will soon.
And there are a couple very important things to consider, BEFORE you file your 2020 tax return.
This is a bit tricky–and, again, the bill has not passed yet, so this could change–but please follow along because what you do and when you do it could make a BIG difference in how much money you have in your pocket within the next 60 days.
If your income was lower in 2019 than it was in 2020, you may want to wait to file your 2020 tax return until after this new stimulus bill passes.
This is because Congress is proposing lower income limits for the new stimulus payments–and, if you don’t file your 2020 tax return, IRS will use your 2019 tax return to qualify you for this third stimulus payment.
So let’s say for example that you go and file your 2020 tax return and your 2020 income is over the limits for stimulus payment eligibility.
But your 2019 income would have qualified you.
In this case, you just cost yourself a lot of money by filing your 2020 tax return early.
They are saying this new stimulus will be up to $1,400 for each person on your tax return.
So it’s a lot of money at stake here!
Here are the proposed income limits for the new $1,400 stimulus payments:
|Filing Status||Full $1,400 per person maximum (based on AGI)||Not eligible (based on AGI)|
|Single||Less than $75,000||$100,000 or more|
|Head of Household||Less than $112,500||$150,000 or more|
|Married Filing Jointly||Less than $150,000||$200,000 or more|
Now let’s say you’re in the opposite situation:
Let’s say your 2020 income is lower than your 2019 income. In this case, you would (generally speaking) want to file your 2020 tax return now, before the new stimulus bill passes, so that you do receive the new $1,400 per person stimulus payments, based on your lower 2020 income (rather than IRS using your higher 2019 income).
Hopefully that makes sense? We know it’s a bit tricky. We are training all our tax team members on how this works, but it’s also important that YOU understand these “loopholes,” because it’s YOUR money at stake here.
One other thing to consider regarding this new stimulus bill is that Congress is considering making the first $10,200 of unemployment benefits for 2020 non-taxable.
If you received unemployment benefits in 2020, you may want to wait then until the new bill passes, so that you don’t end up needing to file an amended return if they do end up making unemployment benefits non-taxable.
Keep in mind that every situation is different and nothing in this email should be used as specific tax advice about your specific tax situation.
Just wanted to make sure we are keeping you in the loop about some very important information that could mean a LOT of money to you and your family and friends.
Please feel free to share this info with friends and family!
We’re here to help, ~Contact.FirstName~.
If you need us, all of our contact information is right here on our website Pronto4Tax.com —> https://pronto4tax.com/
Pronto Income Tax Team