President Biden signed $1.9 trillion American Rescue Plan Act today, March 11, 2021. As a result, you may want to consider moving your personal tax filing date. Under the new legislation, eligibility for the $1,400 economic income payments is based upon adjusted gross income. The Treasury will use 2019 or 2020 income data filed with the Internal Revenue Service (IRS) to determine who will receive the payments this year, whichever was filed most recently. If you have not yet filed your 2020 tax return, you may want to either hurry up or wait until after you’ve received the stimulus to file.
When To Hurry Up And File
If you usually wait to file until April 15 or file an extension, but your income was lower in 2020 than in 2019, you may want to hurry up. Here are the numbers you need to know:
- If single, and your adjusted gross income was higher than $80,000 in 2019, but lower in 2020
- If head of household, and your adjusted gross income was higher than $120,000 in 2019, but lower in 2020
- If married, and your joint adjusted gross income was higher than $160,000 in 2019, but lower in 2020
When To Wait
If you usually file before April 15, but your income was higher in 2020 than in 2019, you may want to delay filling, even file an extension to October 15, 2021. The income eligibility bands are more narrow than the two prior stimulus payment eligibilities in 2020.
- For single filers, the earnings phase out range is $75,000 to $80,000
- For heads of household, the earnings phase out range is $112,500 to $120,000
- For couples, the earnings phase out range is $150,000 to $160,000.
Check your adjusted gross income on line 8b of your 2019 Form 1040 (line 11 on your 2020 Form 1040), if you expect this number to be higher or lower than your 2020 income. You may want to consider taking some action.
When Will You Get Your Payment?
More than 90% of Americans file taxes electronically in 2020. As such, most people can receive direct deposits for their Economic Impact Payments. According to Press Secretary, Jen Psaki, “people can expect to start seeing direct deposits hit their bank accounts as early as this weekend.” If you do not have a direct deposit established with the IRS, your check or debit card will take longer to arrive.
If you believe you were eligible to receive the 2020 Economic Impact Payments and did not receive one or both, or received a partial amount, you may qualify for the Recovery Rebate Credit. According to the IRS, “you must file a 2020 tax return to claim the credit even if you don’t normally file.” For a list of frequently asked questions regarding 2020 Economic Impact Payments, visit https://www.irs.gov/newsroom/recovery-rebate-credit-frequently-asked-questions.
For specific advice regarding your situation, be sure to contact your tax adviser or accountant.