Timing Your Tax Filing Could Mean a Bigger Stimulus Check
Filing your 2020 tax return at the right time is quite important this year because if you do so, you could get a bigger stimulus check. The Senate is likely to pass President Joe Biden’s $1.9 trillion COVID-19 relief package, which would give eligible Americans stimulus check payments of $1,400 as the maximum amount.
Until now, the eligibility criteria are the same as the first two checks—individuals with up to $75,000 as adjusted gross income and married couples filing jointly with up to $150,000 as adjusted gross income will get the full stimulus check amount. However, these details may change as the Senate discusses the bill. Irrespective, filing your tax return before or after the relief package is passed may affect the size of your stimulus check.
When you should file early
You should file your 2020 tax return before the new relief package is passed if your income dropped between 2019 and 2020, or you had a baby or brought another child or dependent into your household. In any such situation, you could claim any previous stimulus payments owed on your account as a recovery rebate credit and ensure you have the latest information on file for the new round of stimulus checks. This could reduce the amount you owe or lead to a larger tax refund.
If you recently moved or changed your bank accounts, file your tax return now so that the IRS doesn’t send the payments to the bank account or address to which the previous stimulus payments were sent.
When you should wait to file
You may want to hold off on filing your tax return until the latest relief package is passed if you made more money in 2020. This way, the payment will be calculated using your 2019 income information. If you belong to this category, you may want to calculate your 2020 adjusted gross income and compare it to the guidelines in the new stimulus bill proposal.
Time your tax-filing well to make the most of the latest relief package.