LEAWOOD, Kan. — The U.S. House of Representatives is set to vote on the $1.9 trillion stimulus bill Wednesday. Leadership says it has the votes to pass.
But there’s been a lot of changes in the bill, not only to whose eligible for those $1,400 payments per person and dependent, but also on what’s taxable this filing season.
It has a lot of people asking tax preparers if they should file now or wait. People who have already filed might also be faced with having to file amended returns.
Full stimulus checks would be mailed out to single filers with adjusted gross incomes of $75,000 or less, or $150,000 if filing jointly. But the IRS will use the most recent income it has for you. Because of the pandemic, many people had reduced income in 2020.
“If you can get more by waiting, you might want to wait, and if you get more by filing early, you may want to file early,” CPA Julie Welch explained.
There’s also confusion stemming from increases to the child tax credit, which will increase $2,000 to $3,000 for each child age 6-17, or $3,600 for children under six. Those changes are for the 2021 tax year, normally meaning you wouldn’t deal with them until filing your taxes next year. But the plan is for half of that credit to be mailed out in monthly payments starting in July.
But perhaps the biggest good headache to have will be for people who collected unemployment last year. The American Rescue Plan Act of 2021 would make the first $10,200 of those payments tax-free.
“I had it set up for taxes to be taken out; my spouse did not though,” Chloe Willett said.
It’s meant to help people on unemployment facing big tax burdens now. But if you already paid your taxes this year, you’ll have to file an amended return, which could mean extra fees for electronic filing or tax preparation.
Bottom line, if the stimulus and the changes affecting taxes right now go into effect, just make sure you claim your money.
“Nobody’s going to come knocking on your door saying, ‘Hey, you’re entitled to a refund,’” Welch said.
If you fall into that category of making just a little too much for the stimulus this year, between $75,000-$80,000 for single tax payers, Welch said you might be able to get a partial stimulus payment or even a full payment by looking for deductions some of which can still be claimed even if you are taking the standard deduction.
The IRS has not announced what date it will use as a filing cutoff to have 2020 tax information considered instead of 2019, but Welch said it might be as early as March 14.