In this vlog, Jason Hatley goes over everything you need to know about the first and second round of stimulus payouts and how it relates to filing your 2020 tax return. Watch the vlog to hear Jason explain the following topics:
Round One: Generated by the CARES Act Passed in March 2020
- Provided $1,200 for qualifying individual taxpayers ($2,400 for married couples) + $500 per qualifying child.
- Given to single filers with AGI ≤ $75,000 (phased out between $75k and $99k)
- Given to married filers with AGI ≤ $150,000 (phased out between $150k and $198k)
Round Two: Generated by Coronavirus Response and Relief Supplemental Appropriations Act Of 2021 Passed on 12/21/2020
- Provides $600 for qualifying individual taxpayers ($1,200 for married couples) + $600 per qualifying child.
- Same AGI and phase-out limits
- Distributed either by direct deposit last week of December 2020, the first week of January 2021, or by check/debit card by the end of January 2021.
- Not considered taxable income
- Payments are considered advance refundable tax credits for 2020.
- Normally tax credits are claimed on the tax return and therefore received when taxes are filed.
- Advance credits – economic value is received prior to the filing of the tax return.
- Non-refundable credits – can only be used to extent that they lower your tax liability to zero; cannot create a tax refund.
- Refundable credits – can be used to their full extent even if they create a tax refund.
- The amount received ultimately dependent on 2020 reported adjusted gross income.
- Due to payments being made in advance, amounts were preliminarily based upon 2019 reported AGI, or 2018 if a 2019 return had not yet been filed.
- If you did not receive advance payments based on prior year income but your earnings were reduced to a qualifying level in 2020, you can claim the credit on your 2020 tax return.
- If you did preliminarily qualify for the advance payments based on prior year income, but your earnings increased beyond the qualifying level, you are not required to repay the amount received.
Feel free to reach out to the team at Fi Plan Partners if you have any questions on how this information relates to your Financial Blueprint.
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