Stop, Collaborate and ListenSubmitted by BCR Wealth Strategies on March 3rd, 2021
Have you already filed your 2020 taxes?
Is your Adjusted Gross Income (AGI) in the neighborhood or $150k - $200k? What?.....you don’t know this number off the top of your head??? j/k
If you have not filed your 2020 taxes and you think your AGI is in this vicinity you need to….
With your tax advisor. But many of you do your own taxes, so you may need to analyze this yourself. (Seek professional advice if you have questions)
The proposed new stimulus package follows the same income phaseout brackets as last year: AGI of $150k - $200k. Below $150k, full stimulus check. Over $200k, no stimulus check. In between the two, a portion of the full stimulus check.
For some, your 2020 AGI is going to look very different from your 2019 AGI. If the stimulus legislation holds as proposed, your most recent tax return filed will provide the framework for what size your stimulus check is or isn’t.
Here are two different examples where this analysis proved to be very effective.
- A retired couple had AGI of $175k on their 2019 tax return. Because RMD’s were not required in 2020, their AGI on the 2020 return will be $120k. And because they filed their 2020 return, they will each receive a full stimulus check instead of ~50%.
- A young couple with a child had AGI of $149k on their 2019 tax return. Because they received raises in 2020 their AGI will be $185k on their 2020 return. By not filing their 2020 return until the stimulus checks are issued, they will receive 100% of the stimulus benefit per person and child instead of a phaseout that will shave over 50% of the benefit.
The legislation is still not finalized and could change. We will stay aware of any changes as should you.
As usual the answer to this opportunity is, it depends. Take a moment to review your 2019 tax return and compare your AGI to your 2020 return and see if filing or delaying when you file will make a difference for you.