People whose income fell in 2020 or who had a baby may want to file quickly to ensure they get their full payment.
With lawmakers negotiating another round of, many Americans are eager to learn if and when they’ll receive a third stimulus check. Aside from Congress’ time frame for passing the legislation, there’s another factor that could influence stimulus payments: your 2020 tax returns. The reason boils down to the confluence of tax-filing season and the expectation that Congress will pass the next relief bill by mid-March. The IRS officially started accepting tax returns on February 12, but said that the filing window will close on its customary date of April 15. The American Institute of CPAs earlier this month urged the IRS to announce by March 1 if it intends to extend the tax filing deadline for all taxpayers. So far, the IRS has for residents of Texas, who have until June 15 to file their returns due to the deadly storms that hit that state. The current timeline effectively means the agency may start distributing stimulus checks in the middle of tax season, which could affect how much Americans get — especially households that lost income last year or who had a child in 2020. The reason: The IRS relies on each individual’s most recent tax filing to determine their stimulus check payment. If a taxpayer doesn’t file their 2020 tax returns before Congress passes its next relief bill, the agency will likely rely on their 2019 tax return to calculate their stimulus check payment — and that 2019 return might not reflect income losses during last year’s economic crisis or a new child, for example. «I would suggest that people file as soon as possible, especially with 75% of taxpayers last year receiving a tax refund close to $3,000,» said Lisa Greene-Lewis, a tax expert at TurboTax. «We are hearing a lot of people say, ‘I had a baby in 2020, how will the IRS know this? When they issued the previous stimulus payment they didn’t know that.'» To be sure, there’s another reason to file early: To get your tax refund as soon as possible, especially if you are owed some money from either one or both of the past stimulus checks. For instance, people who had a baby in 2020 would be entitled to an additional $1,100 in stimulus money ($500 from the first round, and $600 from the second round), which they can claim on their 2020 tax returns. Any additional money owed from the past two stimulus checks will be sent through refund checks this year, the IRS said. Currently, lawmakers are negotiating details of the next stimulus package, including what for the next round of checks, called Economic Impact Payments. Under one plan, Democrats could lower the annual income thresholds to qualify for a payment to $50,000 or less for single people and $100,000 or less for married couples, according to the Washington Post. On February 8, however, House Democrats pushed back on those lower income limits, proposing to keep the income thresholds at the same level as for the previous checks. That would ensure the full $1,400 relief payments would go to individuals making $75,000 or less, while couples earning $150,000 would be entitled to $2,800 relief payments. The payments would ratchet down for incomes above those levels, phasing out entirely for single people earning $100,000 or more and couples earning $200,000 or more.
