It often pays to file your taxes early, and this year there may be more benefits than usual.
Not only can you repay your tax refund sooner, but you can also make sure you get a bigger stimulus check – or a stimulus check – when the new cash round goes out.
President Joe Biden has agreed to a change that will make it harder for millions of Americans to get a $ 1400 payment. If you have counted on more aid money to help you take care of accounts or pay off debt, this is why you want to get your tax return for 2020 in Pronto.
Next stimulus checks will be more ‘targeted’
The Democrats in control of Congress are holding on to the Senate and needed the vote of every senator in their ranks to pass Biden’s $ 1.9 billion COVID rescue package on Saturday. To win over the more conservative Democrats of the Senate, Biden has adopted a compromise that limits the suitability for the upcoming third stimulus checks.
The intention is to “direct” payments to needy Americans, and away from those with higher incomes. This is how it will work:
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Individuals earning less than $ 75,000 and couples earning less than $ 160,000 will receive $ 1,400. Then payments begin to phase out.
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Single taxpayers earning more than $ 80,000 and joint filers with an income of more than $ 160,000 will not receive a stimulus test this time.
Previously, the cut-off points were income of $ 100,000 for individuals and $ 200,000 for couples. As a result of the changes, nearly 17 million fewer U.S. adults and children will receive payments this time around, according to an analysis by the Institute for Taxation and Economic Policy.
Congress is moving fast – and so are you
The IRS will look at your most recent tax return to determine if you are eligible for the stimulus test and for what amount.
This means that if you have faced a significant drop due to the pandemic in 2020, you want to bring the information before the tax agency as soon as possible, as it will entitle you to stimulus cash on the last return you submitted. has.
For example, if you earned $ 77,000 in 2019, but only $ 65,000 in 2020, your 2019 income will disqualify you from a full payment, but your earnings for 2020 will yield you $ 1,400.
The aid bill is now going back to the US House, where a final vote could already take place on Monday. If the president signs the legislation quickly, the IRS can start processing stimulus checks within a few days, which means you may not have much time to file your tax return for 2020, and this will help determine your payment.
Fortunately for you, electronic filing with the current tax software can get you into the IRS system right away.
What if your tax returns do not help you get a stimulus test this time around?
If the new income barriers to obtaining stimulus tests will prevent you from receiving your $ 1400 – even if you file your 2020 tax return quickly – here are some options to take your own stimulus test:
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Reduce the cost of your debt. If you have a lot of credit card debt, you probably pay a lot of interest. Tame the debt – and make it go away faster – by swiping your balances into a single loan with a lower interest rate.
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Reduce your mortgage by refinancing. If you have a mortgage and have not looked at a lower interest rate in the past year, what are you waiting for? Mortgage rates have historically remained low, and refinancing your home loan can reduce your monthly payment.
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Save your policy. You do not always have to pay a premium for the best insurance policies. From car insurance to homeowners insurance, look around and make sure you are not paying more than you should.
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Stretch your dollars. Look for ways to find a little bit in your budget. Turn off the heat slightly to save electricity. Get rid of your cable or one or two streaming services. Meal plan for the week and save on expensive ingredients. And download a free browser extension that gets promotions and coupon codes every time you shop online.