Your 2020 tax return could impact your next stimulus check

Tax season is in full swing, and your 2020 tax return could impact your stimulus payment.

Rules set by the IRS determine who is eligible to receive a stimulus payment, based on information gathered from your 2020 or 2019 returns.

For example, people who brought home more money in 2020, but previously qualified for a stimulus payment based on their 2019 tax returns, are at risk of missing out on the third stimulus check.

If that’s the case in your situation, tax expert Michael Traflet, offers tips on how you can secure your payment.

“They know what you made in ‘19, they don’t know what your 2020 return is, so in that case you’re better to not press that button, because then you will not qualify for the stimulus,” said Michael Traflet, Accountant. “Conversely, if your income was too high in ’19, the IRS wouldn’t give you $1,400 per person stimulus, you’re better off filing that 2020 with a reduced income to tell the government, yes, you do qualify for it.”

He also noted another way to receive the stimulus payment, if your income has increased.

“Tax rules that allow you to bring your income down. Say you were over that amount of money, if you put money into an IRA, okay,  that’s going to bring that income number down, and then you would still get the money. So, sometimes it pays for  itself to put the money in the IRA, because you still got the money,  its just you qualified for the subsidy.”

Traflet said this tax season will benefit some people, who may have missed out on the first and second stimulus payments.

“For some reason, you didn’t receive stimulus number one or stimulus number two, the government says we get to claim that on your 2020 tax return. So, for people who didn’t get the $1,200 and the $600, they’re going to get an extra bump on to it, by filing their  2020 return, they would get an added refund to that year,” said Traflet.

The deadline to file your 2020 tax return is April 15, and if you request an extension, the deadline is October 15.

Categories: Local, New Hanover, Top Stories

Leave a Reply

Your email address will not be published.