Covid-19 Stimulus Check Income Phaseout

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  • #5481
    JustWondering
    Participant

    Hi,
    In 2018, my combined AGI (married filing jointly) was $140K. I have four children under the age of 14. I have not yet filed my 2019 taxes yet but 2019 was a good year for me and my AGI for 2019 will likely be over $200K (I am self employed so no W2s have been transmitted to the IRS). If I file on June 15, 2020, will I get stimulus payments now based on my 2018 income? If the answer is yes, Will I have to pay the money back either now or eventually? Just trying to do some planning.
    Thanks!

    #5486
    kaneohe
    Participant

    My impression is that the amount of the stimulus will be based on your most recent tax return when the check is generated and that no payback will be required. You don’t have to file till July 15 so why not wait longer till you get the check.

    #5489
    Florida
    Participant

    Isn’t the payment a 2020 advance refundable tax credit? If it were normal times, it seems you would be required to repay it at the time you did your 2020 taxes in 2021 because you would not qualify and you had received the advance payment. But these are not normal times and I haven’t done the research to know the answer for sure.

    #5495
    JustWondering
    Participant

    I will definitely wait as long as possible to file and likely file an extension (or at least until a get a stimulus check). Just curious how this will ultimately play out. Unfortunately, I paid my 2018 taxes (I owed a bit of money) with a paper check and the IRS computer doesn’t allow me to update my bank information.

    #5502
    kaneohe
    Participant

    “Here’s another scenario to keep in mind.

    Say someone made below the $75,000/$150,000 income threshold in their 2018 return but their 2019 earnings turned out to be exceed that amount.

    If they receive the stimulus money and submit their 2019 tax return afterwards, the IRS won’t turn around and ask for the money back, according to Rob Seltzer, a Los Angeles–based financial planner who’s the president and founder of Seltzer Business Management.

    “They are not going to claw it back,” he said. ”

    from a marketwatch article

    #5530
    ReachELS
    Participant

    Related to the phase-out, I would appreciate anyone’s take on my particular situation.

    My understanding is that:
    1. The actual law allows a tax credit of $600-$1,200 ($1,200-$2,400 MFJ) to be applied against your 2020 taxes based on a sliding AGI scale.
    2. An advance is to be paid based on your 2018 tax return (or 2019 if already filed).

    We did a Roth conversion in 2019 that made us ineligible for the advance. Without this conversion, we would have received the full $2,400. I do not anticipate doing a conversion this year so our 2020 AGI will come in below the $150k AGI threshold.

    I have read several articles that suggest that we will be eligible for the $2,400 tax credit when we file our 2020 taxes next year.

    Can anyone confirm/deny this understanding?

    #5624
    kaneohe
    Participant

    My understanding is the same as yours. 2020 tax credit but in the interest of getting the stimulus funds out earlier,2018/2019 info was used. Hope we’re right………..I too was not eligible due to RMDs.
    However w/ the suspension of RMDs in 2020, hoping to get most of the subsidy this yr.

    #5645
    ReachELS
    Participant

    Thank you!

    I plan to reduce my pension payment withholding $300/mo from May forward. It’s not exactly $2,400 in hand immediately but it’s better than waiting until next April.

    I really hope we are both right :).

    #5787
    JustWondering
    Participant

    Follow up question if anyone might know: These stimulus payments also included $500/child for any children under the age of 17. But under the age of 17 by what date? My brother has a 17 year old who’s 17th birthday was Mar 29, 2020. His son was 16 on Jan 1, 2020. Any ideas? Thanks in advance!

    #5788
    ReachELS
    Participant

    Just spitballing here but…

    If the law says under 17 and it is a 2020 tax credit, I would guess that your nephew would be ineligible as he turned 17 during 2020.

    That said, if your brother recently received $500 for his son as part of the tax credit advance, there doesn’t appear to be an appetite in the IRS for a clawback of the advance.

    #6280
    JustWondering
    Participant

    Update: In case anyone is still following this thread, I got $4,400 for my family of six based on my 2018 income and my brother got $500 for his son who turned 17 in March of 2020. So I guess you needed to have a child that was 16 or under in 2019 and the IRS based my payment on my 2018 income. Will be interesting to see if I lose any tax credits when I file in 2020.

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