Use This Loophole To Get More In Coronavirus Stimulus Check

0
Use This Loophole To Get More In Coronavirus Stimulus Check
FirmBee / Pixabay

Congress has now approved the massive $1.9 trillion coronavirus relief bill. Once President Joe Biden approves and signs it, the IRS will get into action to send the stimulus checks to eligible Americans. Unlike the first two checks, the third payment phases out faster, meaning fewer people will qualify. However, a loophole in the coronavirus relief bill could help some people qualify or even increase their stimulus check amount.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2020 hedge fund letters, conferences and more

Coronavirus stimulus check loophole

The $1.9 trillion stimulus bill offers up to $1,400 in stimulus checks to adults, children and adult dependents. Individuals with AGI (adjusted gross income) of up to $75,000, married couples with AGI up to $150,000 and heads of household with AGI up to $112,500, will qualify for the full payment.

Consistency is what makes the top 50 best-performing hedge funds so strong

Every month and quarter, multiple reports on average hedge fund returns are released from several sources. However, it can be difficult to sift through the many returns to uncover the most consistent hedge funds. The good news is that Eric Uhlfelder recently released his "2022 Survey of the Top 50 Hedge Funds," which ranks the Read More

The payment will start to phase out after the above AGI, and phase out completely for individuals with AGI of $80,000 or more. To determine your AGI, the IRS will use your 2020 tax return. In case your 2020 tax return isn’t available, the agency will use your 2019 tax return.

This is where the loophole exists.

Similar to the earlier rounds, the coronavirus relief bill doesn’t allow the government to take back the payment you got on the basis of your 2019 return. This means delaying or filing their 2020 tax return can benefit some people.

How to benefit from the loophole

Now that you know about the loophole in the relief bill, detailed below are the tactics to benefit from this loophole:

  • You should delay your tax return (or file an extension) if your AGI was below the cutoff level in 2019, but not in 2020.
  • You need to file your 2020 tax return quickly if your AGI was more than the cutoff in 2019, but not in 2020.
  • If your AGI is above the cutoff in both years, but you can get it below that in 2020 by making an IRA contribution or any other means, then do so quickly.
  • If you run a business, and your AGI is above the cutoff, then you should look for ways to reduce your income, such as charge more depreciation.
  • In case you already filed the 2020 tax return, but believe that by filing an amended return you can get your AGI under the cutoff, you can do that also.

In case you are unable to perform the above tactics, then you could qualify for the payment on the basis of your 2021 income. For instance, a married couple with four children with AGI of $160,000 in 2019 and 2020 would get no stimulus checks now.

But, if the couple makes $150,000 or less in 2021, they would get $8,400 when they file their 2021 tax return. However, the payment at the time would be in the form of a credit that would either reduce their taxes or increase the tax refund amount.

Updated on

Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@wordpress-785388-2679526.cloudwaysapps.com
Previous article Billionaires Could Pay For 2/3 Of Biden’s Rescue Plan
Next article Pfizer CEO Bourla: 94% Vaccine Efficacy On Asymptomatic

No posts to display