Posted by Chuck on March 26, 2020
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Published on March 26th, 2020 | by Chuck

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US Stimulus: Should You File Your 2019 Tax Return Now?

[I am not a tax advisor. Please consult your tax advisor for advice. This is for informational purposes only.]

A lot of people were confused about the $1,200 checks/deposits slated to be given out as part of the massive US stimulus bill which is expected to be approved into law tomorrow.

Does it evaluate your income based on 2018, 2019, or 2020?

According to the most recent information, it’s clear that the feds will be using your 2019 tax return to determine your eligibility. If you have not yet filed your 2019, only then will they use your 2018 tax return.

However, people smarter than me have confirmed that it’s really dependent on your 2020 income, such that if you earn less in 2020 than you did in 2018/2019, that will make you eligible. You’ll get the money back when you do your 2020 taxes.

Note: news sources indicate that the feds are not planning on clawing back your check if you earn more. So, in the end, people will get the better of the two: if you made less in 2020, you’ll eventually get the money when you do your 2020 taxes; if you made less in 2018/2019, you can get the check and it won’t get clawed back from you.

This being the case, it’s important to decide now whether to file your 2019 tax return. The deadline for filing was pushed out until July 15th, but it’s worth crunching some numbers to see whether to file or not (see below). Regardless, you don’t have to pay the bill until July 15th, but it could still be worth filing now.

Should You File Now?

If you’ve already filed your 2019 return, there’s nothing you can do. If you have not yet filed, then…

  • If your income in 2018, 2019, and 2020 is all under $75,000 or over $99,000 (double that for couples filing jointly) then it doesn’t matter if you file your 2019 return now or you wait to file later.
  • If your income in 2018 was less than $99,000 (double that for couples) AND your income has increased for 2019 and 2020 you don’t want to file your return until after receiving the stimulus money.
  • If your income in 2019 and 2020 has decreased to less than $75,000 (double that for couples) and in 2018 your income was above $75,000, then you’ll want to file your return to get the money faster. You’ll end up getting the same amount of money anyway since you’ll  get it as a refund with your 2020 taxes, but filing your 2019 return will help you get it faster.
  • If your income in 2018 and 2020 is/will-be more than $99,000 and your income for 2019 is less that, be sure to file as soon as possible as you could be losing out on thousands of dollars by not filing now. They’ll look at your 2018 return and they won’t give you a check. They’ll look at your 2020 return and they won’t give you a refund. BUT if you file now, they’ll send you a check and they reportedly will not claw it back.

No exact date is known for when they’ll look to see your tax return. Will they process a massive list on the date that the bill passes into law (expected on 3/27/20)? Will they check each person on the date the checks/deposits are being sent out (will likely be another couple of weeks)? It’s not known exactly how it’ll play out, but suffice it say that if you would gain by having your 2019 numbers in the system I’d do it sooner rather than later and hope for the best.

Other Reasons To File

A bunch of other reasons you might want to file your return now:

  • If you had a child during 2019 or 2020, you might want to file your return so that the feds know to credit you for the child. If you don’t file now, it’s unclear if they’ll use other records to credit you or they simply won’t credit you. My guess is that they won’t send you the money now, but they’ll send it back to you when you do your 2020 taxes. That’s just a guess.
  • If you were a dependent in 2018 and not in 2019 (e.g. you are a 20 year old college student and in 2018 your parents filed you as dependent and in 2019 you are planning to file on your own), then you’ll want to file quickly. That way, you’ll get the $1,200 payment. If you don’t file now, you should get the $1,200 as a refund/deducted when you file your 2020 tax return.
  • If you’ve never filed a tax return in the past in which case it might be hard for the feds to find you to get you the check.
  • Similarly, if you have a new address or new bank, it might be beneficial to file now; the feds should find you eventually, but it’ll be quicker if they have your update info. (You can change your address using this form, though it’ll take a number of weeks to process. You can also try calling the IRS at 800-829-1040, M – F, 7 a.m. – 7 p.m. to try changing your direct deposit info.)

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Jags
Jags

Yea i completely botched this and filed 2019 like a day before this passed. We’ll get nothing 🙁

Packman
Packman

Why did you file with this being in the news for the past week or so?

Jags
Jags

Quarantine is boring so I did them and I didn’t think the income limits would be so generous. Also I just figured they’d use 2018 and not mix and match.

Anthony
Anthony

Me too. I was owed a refund due to overpayment, so I filed this month. I would have qualified for 100% based on 2018. 0% for 2019.

It was a voluntary overpayment due to meeting an MSR too. Impossible to predict stuff like this, but it definitely sucks.

Cjrmets
Cjrmets

Did you pay yet? Why don’t you file an amendment? Then once you get your check, file it your original way

Avi
Avi

You mean commit intentional fraud?

Avi
Avi

You mean commit intentional fraud?

tennismenace3
tennismenace3

I’m guessing it’s illegal to intentionally do your taxes wrong

Bok4lf
Bok4lf

Honestly, I was just researching this. I also made a mistake. I did mine in February. Maybe 3rd week. Now, my 1 number mistake, “Ssuuurely” gave them a number that STOOD OUT from the rest!! I’d been waiting to receive a letter before I amended. I applied for amendment maybe 1st 2nd week of March. Just hasn’t started. Would you still consider that intentional fraud??

Eddy Cue
Eddy Cue

My question as asked on the previous thread – what happens if your bank account is closed (from 2018 return)?I guess they will eventually send you a check. Filing my 2019 return may not be beneficial for me

Thom
Thom

Anyone have insight on how newborn children are treated? E.g. a child born in 2019, but taxes for 2019 aren’t filed yet. Will the stimulus be based on 2018 taxes without children (and thus deny payment for any child born in the past 1.25 years), or will it somehow recognize that a family has a new member through birth records?

Rubort
Rubort

I would also like to know. We had a child born this year.

Aloha808
Aloha808

I’d assume they’ll send the check to whoever claimed the child on their taxes. So, you know the rest.

Gary
Gary

I doubt highly the feds will be able to tie a newborn to your tax data. BUT – I would expect there would be a way to get this when you do taxes next year.

Superman
Superman

Do children born in 2020 get the payment?
Parents of children born in 2020 won’t get a payment for that child now. However, assuming they qualify based on their 2020 income, they will get $500 added to their tax refund or subtracted from their income-tax bill when they file their 2020 tax returns in early 2021.
https://www.wsj.com/articles/everything-you-need-to-know-about-the-payments-from-the-government-11585229988

Zac H
Zac H

I’m in an odd situation where I made substantially more in 2018 than I did in 2019 due to a bonus. I do not usually get the bonus and my annual income is substantially lower in most years. I filed in late Feb of this year and am really glad for the stimulus to be based on the most recently filed return. Thanks for the consolidated article Doc(s). I’ve been grinding on your Swagbucks notes recently trying to scrape together a couple extra bucks with the market in such a volatile state.

Matt
Matt

One thing I haven’t seen is whether the $500 is based on the number of children you have as of 2020. We had a child in January 2020, so he was not on our 2019 tax return. I’m pretty sure this means we won’t get the $500 in the initial check, but wondering if we will be able to claim the $500 when we file our 2020 taxes.

Mr Man
Mr Man

I had a child end of 2019, so I guess I better file

AllenW
AllenW

Then I assume you would get a credit / refund in 2020 taxes

Superman
Superman

“Parents of children born in 2020 won’t get a payment for that child now. However, assuming they qualify based on their 2020 income, they will get $500 added to their tax refund or subtracted from their income-tax bill when they file their 2020 tax returns in early 2021.” https://www.wsj.com/articles/everything-you-need-to-know-about-the-payments-from-the-government-11585229988

Bruce
Bruce

I would have received the full amount, but since I filed 2019 early, I will now receive nothing. My income went up, but now all my student loans are due and I lost my job. On the other hand, my friends from high school who voluntarily choose not to work and live off scraps will be getting some free cash.

The only hope is they somehow backdate the cutoff for 2019 tax returns, but I seriously doubt it

Celia
Celia

It sounds like you’ll be able to get it when you file next year since it sounds like you’ll make substantially less this (sorry about the job). The student loan part is crazy, only Fed loans seem to get any relief. So much is still unclear, like the unemployment part.

Penny
Penny

Also keep in mind of state deadlines…. So for my state MA, our deadline is still April, haven’t changed to July yet.

Celia
Celia

MA is Massachusetts, right? They’ve extended theirs to 7/15, I thought today they announced it. Maybe I misread it. Illinois just caved in yesterday to push the deadline to match the Fed.

Edgar
Edgar

If I was claimed as dependent in 2018, could I quickly file the 2019 return as independent and get the check?

NHMac
NHMac

So in 18 I got a small refund while in 19 I owe. My read from here and other places is I’d get 600 for 18 since I got a refund but 1200 if I filed 19 now since I owed. Am I interpreting this right?

Ben
Ben

No, it has nothing to do with whether your withholding was too high (you got a refund) or too low (you owed) and only with the total taxable income.

Lrdx
Lrdx

No, it doesn’t matter if you got a refund or not.
Only adjusted gross income (Form 1040 line 8b) matters.

Gary
Gary

Please learn a bit more about taxes. It all matters what you make and what you pay. You PAID taxes both years. Refunds mean NOTHING.

Gabe
Gabe

What happens if a “kid” turned 18 last year? He was claimed as a dependent last year but is an adult this year. Would they send $500 or $1200 or $0? Last year he had no income, except for a $100 bank bonus.

Xandy
Xandy

I have a similar question: my child is about to turn 18. I claim her as a dependent. Does it matter when she files for 2019 (e.g., should she file now or wait until next week on her 18th birthday)? Does it matter when I file (e.g., should I try to make it happen before her 18th birthday)? I haven’t done my taxes, yet, so I’m not sure the AGI change, but it will certainly have less of an effect than an extra child or her receiving a $1200 check.

Xandy
Xandy

Answering my own question… I think it doesn’t matter when my child files or when I do because I am still going to claim her as a dependent, which, I believe, is more valuable than the $700 difference if she were able to get the $1200. Of course, she’s asking me to give her the $500 I’m getting for her, but I should expect that; she’s my daughter :-).

qmc
qmc

Sure. Her new rent, btw is $500.

Celia
Celia

Isn’t the dependent deduction like $1100? Even assuming a 25% tax rate, that is only a savings of $275. Or are there child credits in the new tax law? No kids so didn’t keep up on the changes.

CtownBin
CtownBin

In the new tax law, 2018 and on, there are no more exemptions (though it was $4,000 btw in the old law). Instead, there is an extra $1,000 in Child Tax Credit. So it is now a $2,000 credit instead of the $1,000 it was in the old law.

Celia
Celia

That makes more sense then, thank you for that.

RM
RM

Xandy What is the value to you of claiming the child as a dependent? The sec. 151 exemption is $0 now, and the child credit does not apply once they turn 17. What else do you get? Oh, and by the way, you don’t get the $500 stimulus check if your child is 17 or over (“qualifying child” is a child within the meaning of IRC sec. 24(c)). https://www.law.cornell.edu/uscode/text/26/24

RM
RM

Xandy Nvm, having temporary brain failure. You would still get a state tax law benefit in most states from claiming the child as a dependent even if you don’t get any federal exemptions or credits.

RM
RM

I also forgot that you would get the $500 federal credit for other dependents. Sorry about the sequential comments; my wife is a front-line health care responder, so my mind is elsewhere at the moment.

Xandy
Xandy

RM Even though you later said nvm, I think you’re right. I was wrong on at least two counts: (1) I was mistakenly believing I would still get the $2,000 Child Tax credit, and (2) I was mistakenly believing I would get the $500 “recovery rebate” (a.k.a. “stimulus”). I was applying the definition of “qualifying child” from 152(c), not 24(c), the latter of which seems to apply to both the Child Tax Credit and the “recovery rebate.” So, if I continue to claim her as a dependent, I think I get the only get $500 federal credit for other dependents. I live in VA, so I don’t think I get anything additional, but I’m not really sure.

Does anybody know if we even get to choose, or does she have to file as a dependent if I’m *allowed* to claim her? In another comment USam points to “eligibility,” rather than actual claiming and the CARES Act currently says, “any individual with respect to whom a deduction under section 151 is allowable to another taxpayer” is not eligible. So, if I don’t claim her, is she allowed to file as independent?

Now it’s feeling like neither of us is able to get anything for her. She’s ineligible because a deduction under section 151 would be allowable, but I don’t get anything for her because she’s not a qualifying child under section 24(c). So, by the two sections using two different definitions, she falls through the cracks. Am I understanding this correctly or making more mistakes like yesterday?

RM
RM

Xandy I think your understanding in the last paragraph of your comment is correct — older teens get whipsawed.

If you have not filed your 2019 taxes yet, perhaps you should wait. If your child was 16 in 2018, and the IRS relies on your 2018 return, you should get the $500 check for her if your 2018 AGI was otherwise below the phase-out limit because the IRS would use your information from the 2018 tax year and your daughter would meet the sec. 24(c) definition for that year.

Alternatively, if she turns 19 in 2020 and will *not* be a student, then she would not be a dependent under sec. 151 and she could get her own $1,200 as a credit on her 2020 return. That credit is refundable, so she does not even need to have any tax liability in 2020. https://www.doctorofcredit.com/us-stimulus-government-to-mail-out-1200-checks-to-most-americans-unemployment-expansion-more/#comment-946539

But if she will still be a student in 2020, and you file your federal 2019 return now, then you would be out of luck, unfortunately, because then she would not qualify for 2019 and would remain a dependent under sec. 151 for 2020.

Putting all of this federal stuff aside, you *can* take a $930 personal exemption for your daughter on the state return in Virginia if she is still your dependent for state law purposes. See Form 760, Section A + line 12. https://www.tax.virginia.gov/sites/default/files/taxforms/individual-income-tax/2019/760-2019.pdf. So the 2020 federal options need to be balanced against the potential loss of this state benefit for 2020.

Xandy
Xandy

RM Thanks. She turns 18 next week *and* she’s a full-time student, so I think she’ll be a dependent for both 2019 and 2020. I hope you’re right that they give me the $500 rebate for her because she was eligible on my 2018 taxes, but, I’m not going to count on it because they have her birthday, so the information from my 2018 taxes is sufficient for them to determine that she does not qualify.

Xandy
Xandy

IANAL, but my read is that the age of 18 doesn’t matter. Basically, what matters is if they are claimed as a dependent. According to the text of what the Senate passed, eligible individuals (for the $1,200) do not include anyone for whom someone else can claim a deduction and the $1,200/$2,400 is increased by $500 per “qualifying child” for which this page is useful: https://support.taxslayer.com/hc/en-us/articles/360015899451-What-is-a-Qualifying-Child-

Xandy
Xandy

Gabe Again, IANAL, but I now think I was partially wrong. I still think age 18 doesn’t matter. What I now think matters are two different definitions of “qualifying child.” An 18 year old will not increase the recovery rebate of the parent(s) because they are ineligible for the Child Tax Credit under section 24(c) https://www.law.cornell.edu/uscode/text/26/24#c. However, if you are still allowed to claim them as a dependent under section 151 (https://www.law.cornell.edu/uscode/text/26/152#c)*, they are not eligible for their own $1,200. So, assuming your 18 year old is still a dependent as mine is, it appears to me that the two definitions mean that they fall through the cracks.

*Note: I reference section 151 because that is referenced in the Senate bill, but I link to section 152(c) for the definition because section 151 references section 152 for the definition.

Susan

I’ve seen multiple articles and a Bernie Sanders town hall that say that the $500 stimulus only applies to children aged 16 and under. I haven’t looked at the final version of the CARES Act yet because last time I looked it was 247 pages long.

Jack
Jack

According to Forbes: For purposes of getting the $500 per child, the bill uses the same definition for a child as you’d use for the child tax credit. The sticking point for most parents for this purpose is age: the child must be under age 17 at the end of the tax year. That means you do not get $500 for a child above the age of 16, even if they live with you and eat your food and spend your money and sleep in your house.

And since this is considered an advance on your 2020 taxes, 2020 would be the tax year.

CongestionChargd
CongestionChargd

Good point on that I have moved since my 2018 filing so I may go ahead and file 2019 to avoid any headache there.

ChurningFast
ChurningFast

If I owe taxes, anyone knows if I efile it, does it mean I’ve filed my 2019 return? Or will I have to actually pay the bill before they consider my 2019 return to have been filed?

Lrdx
Lrdx

You filed your taxes when you filed your return, not when you paid your dues.

Ryan Goldstein

If you’ve already filed your 2019 taxes and claimed an adult dependent (for a $500 credit), would it make sense to file an amended return without claiming that dependent so they’d get $1,200?

USam
USam

It says that anyone who is eligible to be a dependent is not qualified. Presumably that means even those who weren’t claimed as dependents, but are eligible to be claimed.

Princess Davis

My question is how do we expect to receive stimulus checks when people like me haven’t even received their federal refund? Granite due to an ID verification which has been submitted three weeks ago

Jenny Garcia
Jenny Garcia

I’m in the same predicament i filed my taxes in January still being processed due to verifying my identity. I had a appointment with the irs to verify my identity on the 17th of April but now everything is closed do I still get part of the stimulus package?

Gary
Gary

Does not matter when or if you get a refund. Based on filling information. Refunds do not matter at all.

Ben
Ben

I think the point is that the IRS is behind on sending out checks, so won’t having an extra 100 million to send out put them hopelessly behind…

K.M.
K.M.

i sent my paperwork to my tax preparer but because of lock down the office is closed 🙁 they are working from home though so hopefully my taxes get filed soon. (i fall in to one of the “A few other reasons you might want to file your return now” categories).

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