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The government is preparing to send cash relief to American households – and how you approach this year’s tax season may affect the size of the check you receive.
The payments are expected to be $1,200 per adult for those with adjusted gross incomes of up to $75,000. The threshold for married couples is $150,000, who are eligible for $2,400 and $500 per child.
The checks will be based on your adjusted gross income as reported on your tax returns. The IRS will first look to use your 2019 return, but for those who haven’t filed yet, the agency will defer to 2018. It is important to note that taxpayers have until July 15 this year to file their returns, so there is no rush.
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And for some people on the fringes of the cutoff thresholds, it could be worthwhile to delay filing your 2019 returns if you haven’t already filed.
“If 2019 might produce a lower check – or no check at all (because you may be over the income limits that year) then wait to file 2019 so your 2018 income will be used,” Ed Slott, founder of IRAhelp.com, told FOX Business.
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The benefits begin to phase out at $75,000 for individuals and $150,000 for married couples filing jointly. The phase-out rate is $5 for every $100 above the threshold an individual earns.
For example, individuals earning $75,500 would see their checks reduced to $1,175.
The benefit will phase out entirely for individuals earning more than $99,000, for heads of household with one child earning more than $146,500 and for married couples filing jointly without children earning more than $198,000.
So for some individuals, the difference between their adjusted gross income during the 2018 and 2019 tax years could put them above or below different cutoff levels.
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There is a downside for those who decide to delay filing, however.
“If you are due a refund, you’ll have to wait longer for it,” Slott said. “But it might be worth it to get a bigger check, especially if 2019 income is so high that you would not even receive a check.”
The average tax refund as of the week ending March 20 was $2,936, according to data from the IRS.
Lawmakers have said the stimulus checks will be sent out “as rapidly as possible.” A timetable has not yet been announced, but Treasury Secretary Steven Mnuchin has stated a target of the next two weeks.
The relief is intended to hold Americans over until the U.S. economy is up and running again. The federal government and state governments have made the decision to shut down many businesses in an attempt to limit human-to-human contact. As a result, many people have either found themselves without a job or with reduced hours.
Initial jobless claims last week hit the highest level in recorded history – at nearly 3.3 million.