Tax return 2020: does it affect third stimulus check?
Your AGI could decide how much you get in your next stimulus check, here's all the information you need on how your tax return 2020 will affect stimulus.
Tax season is upon us once again as Americans have to file annual tax returns with the IRS. However this year is a bit different with some new terms, new payments and even greater consequences.
The federal government has issued trillions of dollars in relief to help the country through the economic downturn caused by the coronavirus pandemic. The introduction of stimulus checks adds another layer of importance to this year’s tax returns, with any upcoming stimulus payments likely to be based on the information filed this spring.
Today is the first day the IRS is accepting 2020 tax returns...— Mike Fischer, CPA (@MikeProLedgr) February 12, 2021
For those eligible for stimulus checks using 2019 income that earned more in 2020, may want to delay filing 2020, as your most recent income # is used to determine your eligibility for this next round of stimulus!
Adjusted Gross Income will be used to decide stimulus check eligibility
Congress is gradually working towards passing the covid-19 economic relief bill, the American Rescue Plan, proposed by President Joe Biden shortly before he took office. The $1.9 trillion package includes, amongst other things, a round of $1,400 stimulus checks for eligible Americans.
To break that down: your gross income is the total amount of money that you receive in a year through wages, dividends, capital gains, business income, retirement distributions and any other income streams you may have.
Adjustments can be accrued through educator expenses, student loan interest, alimony payment and contributions to a retirements account; which are all expenses to be deducted from your gross income to lower your AGI.
Therefore your AGI may be lower than your gross income, but can never be higher than it. In the case of married couples who file jointly, all the incomes streams and adjustments are bundled together to produce a single figure.
How do I check my Adjusted Gross Income?
Reports suggest that the new round of stimulus checks will be available to individual filers with an AGI of less than $75,000 per year, and to joint-filers with a combined AGI of less than $150,000 per year.
To work out your own AGI and see whether you are eligible for the full $1,400 stimulus checks the IRS has published this guide:
Third stimulus check: live updates
How to check your AGI:
- Your AGI is on line 8b of the Form 1040 on your most recent tax return.
- If you are a first-time filer over the age of 16 then your AGI will be zero.
- Anyone with an Identity Protection PIN (IP PIN) can access the information on the software, which can also be accessed through this online tool.
- If you don’t have a copy of your tax return, you can use Get Transcript Online to view your AGI; simply complete the identity verification process, select Tax Return Transcript, and view the “Adjusted Gross Income” line entry
- You can also access the information by Mail, or call 800-908-9946 to request a Tax Return Transcript
You can get the latest updates on the proposed third stimulus check, and other mooted aid measures such as the expanded child tax credit, by following our dedicated live blog.
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