It is often worthwhile to file your taxes earlier, and this year there may be more benefits than usual.
Not only will you receive your tax refund earlier, but you can also be sure to get a bigger stimulus check – or a stimulus check, period – when the new money round comes out.
President Joe Biden agreed to a change that will make it more difficult for millions of Americans to receive a payment of $ 1,400. If you are counting on more relief money to help you take care of bills or pay off debts, see why you may want to get your 2020 tax return soon.
The next stimulus checks will be more ‘targeted’
Democrats who control Congress hold the Senate by a hair and needed the vote of all the senators in their ranks to approve Biden’s $ 1.9 trillion COVID bailout package on Saturday. To win over the Senate’s most conservative Democrats, Biden accepted a deal narrowing eligibility for the next third stimulus checks.
The intention is to “direct” payments to the neediest Americans – and away from those with the highest incomes. Here’s how it would work:
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Individuals earning less than $ 75,000 and couples earning less than $ 160,000 would receive an entire $ 1,400. Then, payments begin to be eliminated.
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Single taxpayers earning more than $ 80,000 and joint taxpayers with an income above $ 160,000 would not receive stimulus checks this time.
Previously, the cutoff points were earnings of $ 100,000 for individuals and $ 200,000 for couples. Under the changes, about 17 million fewer adults and children in the United States will receive payments this time, according to an analysis by the Institute of Taxation and Economic Policy.
Congress is moving fast – and so should you
The IRS will review your most recent income tax return to determine whether you qualify for the stimulus check and for what amount.
This means that if you faced a significant drop in revenue in 2020 because of the pandemic, you will want to get this information in front of the tax agency as soon as possible, as it will base your eligibility for stimulus money on the last statement you submitted .
So, for example, if you earned $ 77,000 in 2019, but only $ 65,000 in 2020, your 2019 income would disqualify you for a full payment, but your 2020 earnings would result in $ 1,400.
The bill now returns to the US House of Representatives, where the final vote could take place as early as Monday. If the president signs the legislation quickly, the IRS can begin processing stimulus checks within a few days – meaning that you may not have much time to file your 2020 income tax return, so this will help determine your payment.
Fortunately for you, electronic filing using today’s tax software can put your return on the IRS system almost instantly.
What if your tax returns don’t help you get a stimulus check this time?
If the new income barriers to obtaining stimulus checks prevent you from receiving your $ 1,400 – even if you submit your 2020 income tax return quickly – here are some options for essentially making your own stimulus check:
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Cut the cost of your debt. If you have a lot of credit card debt, you are probably paying a ton of interest. Master that debt – and make it disappear faster – by concentrating your balances on a single, lower-interest debt consolidation loan.
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Reduce your mortgage payment by refinancing. If you have a mortgage and haven’t looked for a lower interest rate in the past year, what are you waiting for? Mortgage rates remain historically low and refinancing your home loan can reduce your monthly payment.
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Do it by saving your policy. You don’t always have to pay a premium on the best insurance policies. From auto insurance to home insurance, shop around and make sure you’re not paying more than you should be.
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Increase your money. Look for ways to find a small budget in your budget. Turn the heating down a little to save electricity. Get rid of the cable or one or two streaming services. Meal plan for the week and cut into expensive ingredients. And download a free browser extension that will automatically find offers and coupon codes whenever you shop online.