Money & Finance

Wait to file your taxes…it could get you a bigger stimulus check

We all procrastinate. Even if we say we don’t, we do. It might only be with small, inconsequential things like dusting the spare room, canceling your gym membership, or changing that 90’s themed email address you promised yourself you’d quit using…. The problem is that ninety-nine times out of a hundred, procrastinating will cost you – whether that be your time, money, or sanity. Every once in a while though, it pays off. For millions of people who have yet to file their 2019 tax returns, that procrastination could result in a bigger stimulus check. Make sure you read the whole way through – it’s possible this bigger check could come with some strings.

In response to the virus that shall not be named, many Americans will be receiving a stimulus check as part of the CARES Act that was signed into law on Friday, March 27th, 2020. The size of your check depends on a few factors including your income level, tax filing status, and how many dependents you claim. There are specific income ceilings for receiving a full stimulus check for each filing status, as well as range above that threshold where your payout will be tapered off.

How much money will I get?

Data source: The Washington Post

Payouts for those that made equal to or less than the Adjusted Gross Income (AGI) limits:

Single Adults: $1,200

Head of Household: $1,200*

Married Filing Jointly: $2,400*

*Heads of household and married couples filing jointly will also receive an additional $500 per dependent under the age of 17.

Partial Stimulus Checks

If your income falls in the range between the full and partial check limits, your stimulus check will be reduced by $5 for every extra $100 you made in income. Those who made more than the corresponding partial AGI income ceiling will not receive a stimulus check. If math isn’t your thing, I recommend you check out this stimulus payment calculator.

What’s important to know is that because the government is working to get these checks out quickly, they’re using the reported income off of your most recent year’s tax return – either 2018 or 2019. So, if your income in 2019 was greater than it was in 2018 and you haven’t filed your 2019 taxes yet, it might be wise for you to hold off on filing. Waiting to file could pay off with a bigger stimulus check. The opposite is also true though – if you made less in 2019 than you did in 2018, you’ll likely benefit from filing your 2019 tax return ASAP.

Will I have to pay this money back?

Short answer: No*

Long answer:

Your stimulus check is essentially an early-issued, refundable tax credit for 2020. It will not be counted towards your 2020 income, and therefore will not be subject to income tax. *If the IRS determines it paid you too much, you may be on the hook for paying back the difference when you do file your 2020 taxes (which is not until 2021). Vice versa – if the IRS paid you too little, the difference will be added to your 2020 tax return.

Let’s break it down with an example: George, a single guy, made $72,000 in 2018. In 2019, he received a pretty big raise and his income jumped to $85,000. Since George hasn’t filed his 2019 tax return yet, the IRS used his 2018 income and sent him a full stimulus check ($1200). If the IRS was able to use George’s 2019 tax return, his stimulus check would only be $700. That’s because George’s 2019 income was over the threshold for a full stimulus check (see above). By waiting to file his 2019 taxes, George’s stimulus check was $500 bigger. When he files his 2020 tax return, he could have to pay back that $500.

Given George’s specific situation, he knew it made more sense to have some additional flexibility with that extra $500. If you haven’t filed yet – you’ll need to think about what makes the most sense for your financial situation.

How do I receive my money?

The IRS will deposit funds directly into the bank account listed on your most recently filed tax return. If you did not provide direct deposit information on your tax return, snail mail checks will be mailed to your address on file. For more detailed information visit the IRS site.

When will I get my check?

The IRS plans to get checks out within 3 weeks – but I’d recommend counting on the end of April. Snail mail checks will, of course, take longer. If you choose to receive your check via snail mail, make sure to leave a roll of toilet paper on your doorstep as a thank you for your mailman.

What if I do not receive my check?

A mailed notice will be sent out a few weeks after the checks are sent. If you don’t receive your check, keep an eye out for that notice and contact the IRS with the information enclosed.

What should you do with the money?

You know your own financial situation best. This money is a helping hand to make sure you’ve got your essentials covered in this very unpredictable time. If your bills, emergency fund, and checking account are all healthy, I’d encourage you to think about putting that money to work.

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