The third round of stimulus checks are already being rolled out. Millions have already got the payment, but many failed to qualify for the payment on the basis of their income. If you believe your income is near the threshold, there are a few tricks that can help you to boost your coronavirus stimulus check amount.
Tricks To Boost Coronavirus Stimulus Check Amount
The $1,400 stimulus checks are part of the $1.9 trillion American Rescue Plan approved by Congress and President Joe Biden earlier this month.
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Similar to the first two rounds, the coronavirus stimulus payment uses the same income thresholds. Individuals with adjusted gross income (AGI) of up to $75,000, heads of household with AGI up to $112,500 and married couples (file jointly) with AGI up to $150,000, would get the full stimulus payment of up to $1,400.
The stimulus payment, however, phases out quickly this time. Individuals with AGI of more than $80,000, head of households with AGI over $120,000, and couples with AGI of $160,000 or more, won’t get any stimulus payment.
If you believe your AGI won’t let you qualify (or qualify for a lesser amount), then there are tricks to help you adjust the AGI in your favor. And, this trick is using the retirement savings and 401(k) contributions. These tricks, however, would likely benefit those on the cusp of eligibility.
Tricks to lower your AGI
Contributions to your IRA are deductible, meaning it helps to reduce your income. It must be noted that Roth IRA contributions are not deductible.
So, if you are an individual with an AGI of around $80,000, you can use the IRA contribution to get your income below the threshold. The maximum you can put in a traditional IRA is $6,000, or $7,000 if your age is 50 or more.
How much you can contribute to the IRA will depend on your income, and if you have a retirement plan at work. To use this, you need to hurry as the last date to file the 2020 tax return is May 17 (extended from the usual April 15 date). However, there is no confirmation if the deadline for IRA contributions is also May 17.
Another trick you can use is to increase 401(k) contributions. This will also reduce your taxable income. Taxpayers can use the 401(k) to put aside as much as $19,500 this year, while those over 50 can set aside a $6,500 extra.
This trick will allow you to claim this year’s stimulus check when you file your tax return next year. These stimulus checks are a type of advanced credit. So, anyone who misses out on the stimulus payment this year, would be able to claim it as a credit next year.
You can also use a tax-deferred health savings account to lower your net income. This, however, will only work if you have a high-deductible health plan at work.