What Is The Deal With Stimulus Checks Round 3?
Hey everyone, I want to talk to you about the stimulus payments, the these new ones, at least the most recent ones that that are about to be being sent out under the American rescue plan, which was signed into law yesterday by President Joe Biden. They include fourteen hundred dollar direct payments, somewhat similar to the previous stimulus checks. But there are some important differences. And so I want to I want to clarify. Number one, these are fourteen hundred dollar direct payments to you and if you have a spouse, your spouse as well, and if you have any dependents whatsoever.
Will I Get Stimulus Checks for My Dependents?
Now I say that and that is actually different than the previous year because the prior year, adult dependents did not qualify to receive a stimulus payment. You didn’t receive one on their behalf and they didn’t receive one on their own, much to the chagrin of many college students who are being claimed by their parents and and that kind of thing. And so so this stimulus actually is different in that regard. So it’s fourteen hundred dollar direct payments to you, your spouse and any of your dependents on your tax return. Now, that means if you have adult children who are your dependents, you will receive fourteen hundred dollars stimulus payments for them. And I know they’re going to ask you for that stimulus money and do what you will with that. That’s an independent decision, but you are going to receive it on their behalf if you claim them on the tax return.
What Are the Income Qualifications for the Stimulus Checks?
Now, in regards to receiving the stimulus money, there are some numbers that are actually a little different from the previous stimulus rounds as well. The prior stimulus rounds had an adjusted gross income phase out range. And what I mean by that is that certain income levels you did not qualify to receive a stimulus payment. Essentially, that income level was one hundred and ninety eight thousand dollars for married filing joint filers. If you made over one hundred ninety eight thousand, you did not receive the stimulus payment at all. If you received less than one hundred and fifty thousand dollars of adjusted gross income then you received all of what you qualified for. And there were some people who were in the in-between who received a ratable portion of or a what you could call a prorated portion of the stimulus payment. So some people receive some kind of strange amounts, but it was all done based on the mathematical calculations from your most recent tax filing. Now, this one, the numbers are different. It’s not 198 and one for married filing joint filers. It it is one hundred and sixty thousand dollars at the top end so that it came down by about thirty eight thousand dollars on the top end. The floor, if you will, is still the same at one hundred and fifty thousand. That means there’s only a small ten thousand dollar gap between when you qualify and receive all of it versus receiving none of it. And the income between 150 and 160 is at a ratable portion. Now I’m speaking specifically in regards to the numbers for married filing joint filers. For single filers, it’s 75000 to 80000, essentially half. And so that should give you an idea of of whether or not you’re going to qualify for the stimulus payment, whether or not you should file a tax return right now because your income may be higher or lower than your twenty nineteen filings, that can be a complicated determination. So if you have questions about that, you should seek a competent tax advisor. And we have many of those here, Molen & Associates. Give us a call and we can help you with that one.
Will the Stimulus Check Be Reconciled On My Next Tax Return?
Now, the the other piece to that is if you file now and and your income is too high to qualify for the stimulus so you don’t get it, then you just won’t receive it. And it is what it is. But if you wait to file now, knowing that once you file, you won’t qualify, but you want to hold off so that you can make sure and get that stimulus money, you need to beware because in the bill it says specifically that they’re going to reconcile, meaning they’re going to determine what your actual qualifications are for receiving the stimulus on the next year’s tax return. The twenty twenty one tax filing. And so now this is where it gets a little more complicated because nothing in taxes is ever simple it seems. The initial stimulus bill from April of twenty twenty did say that it was going to reconcile on the twenty twenty filing. However, that was walked back and they did not reconcile. And so that means if your income went up during twenty twenty, you didn’t end up having to pay back any of the stimulus. It’s not taxable income. You’re not penalized for having received it. You don’t have to pay it back. Nothing, no negative ramifications for having received it. But they did indicate in the bill that there were going to possibly be negative ramifications, but that was completely eliminated. So the point here is they’re telling us in this bill that it will be reconciled on the twenty twenty filing.
How Does Tax Planning Impact My Stimulus Check?
And so it may be that you delay filing in order to make sure you receive the stimulus, and then you may have to pay it back to the federal government when you file your next year’s tax return, the twenty twenty one tax return that you would file in February or March of twenty twenty two. So that, again, that’s what separates the two stimulus payments. One, we didn’t have to pay back this one, they are saying that we will have to pay it back. But they also told us that we were going to have to pay it back last time as well. So is this a boy who cried wolf situation or are they really going to stick to their guns this time? I can’t tell you without a crystal ball. I can’t tell you whether or not that’s going to happen. I can only tell you that’s how the bill is written and I deal with things as they are and not necessarily as I hope they might be. So take with that what you will if you have questions about what we think that you should do, you should give us a call and let us know and we’re happy to help you. Thanks so much.