Economic Stimulus Checks

Tax Accountability Services advises all clients to file their tax returns as soon as possible (i.e. when all their tax information is available).  Still need another reason to file your returns well ahead of the newly-extended due dates?  Consider how your return may your Coronavirus Stimulus Package Check ($1,200/$2,400/$500 for single/married filing joint/children) provided in the CARES Act.  If you haven’t yet submitted your 2019 return, the IRS will use your 2018 return to determine if you qualify by looking at your Adjusted Gross Income (AGI).  Consider the following scenario:

Susan is 29 years old and works as an office manager in Honolulu.  She has not yet filed her 2019 tax return.  Her 2018 total wages from her job and income from investments totaled $110,000.  After having a child in 2019, Susan took an extended time off from work and received $70,000 in wages.  If Susan has not filed her 2019 return by the time the Treasury Department sends out the Coronavirus Economic Stimulus checks in April 2020, the IRS will use her 2018 information to determine her eligibility, and since she was single and made over $99,000, she won’t receive anything.

Susan will have another chance in 2021 to claim her stimulus as a credit on her 2020 tax return, but if she had just filed her 2019 return in a timely manner, she would have received her check a year earlier, and the government would never require her to pay it back, regardless of her income situation in 2020.

Want to see how your situation changes with the recent tax legislation?  Contact TAS now!

For further info on the IRS and their handling of recent legislation, see the following: https://www.irs.gov/coronavirus