Tax Returns 2020 and Stimulus - The Marriage of Inconvenience!
Questions regarding 2020 Tax Returns and 2021 Stimulus Checks
Here is a list of questions that people are wondering about. This is complex because the Tax Returns and Stimulus are almost happening together and this has made this situation a little complex. The marriage between the two makes it a marriage of inconvenience!
Disclaimer: I am not a professional or licensed CPA or tax attorney. Please discuss this with your CPA or attorney before anything. This is just for information purposes and gives you a topic worth discussing with your CPA/Attorney.
Which income from my Form 1040 Tax Returns will be used to base my eligibility for the 2021 Stimulus of $1400?
The answer is the same income that was used to calculate your overall tax for the year 2021. This is also called AGI or Adjusted Gross Income. This is calculated after all the deductions, tax credits, loss carry-overs, and short-term/long-term capital gains. If you are filing as an individual, your AGI should be no more than $75,000, and if you are married filing jointly, your AGI should be no more than $150,000.
My gross income is slightly more than $75,000, can I still get the 2021 stimulus of $1400?
If your gross income is more than $75,000 you still need to apply deductions to see if your AGI is less than $75,000. For example, if you are a teacher with a gross income is $78,000 per year. You have spent some money out of your pocket on class supplies that can be deducted, you also have a Roth IRA that you can fund, i.e. $3,000, you might want to add your interest payment for your student loans to bring down AGI to under $75,000.
Do I have to file the 2020 Stimulus ($1200, $600) I received in my 2020 tax returns?
The answer is, yes and no. The stimulus is just like a tax refund, non-taxable. However, if for some reason you missed all of it, or didn't get it, or only got the partial amount of it, you still need to get the rest of the stimulus. In order to do that, you need to file for it so you can be paid the rest of the stimulus. This has to be done in some worksheets on a Recovery Rebate Credit section of the tax returns (your software/CPA should assist you in this). You might need to provide some proofs like letters from the government.
Should I file my tax returns before I get the 2021 Stimulus or after it? will it affect my 2021 Stimulus check?
This is a bit gray area. It has not been said, but the common assumption among CPAs and Attorneys is that, whatever current tax return the IRS has, they will use it to base your next Stimulus. So, if it's all the same to you, and if it's legal, file the returns after Stimulus has been given to you if you think it is somehow going to affect your stimulus. I have filed the tax returns myself, and I am sure it's not going to make any effect. Some people would prefer to file new tax returns before Stimulus because of certain events in their life, some people may come into the Stimulus bracket by filing new returns. It's better to be safe than sorry!
