Delay Tax filing? Stimulus check?

[CardsFan]

In a nutshell:

2019 AGI was $102,000

2020 AGI will be just under $148,000 due to higher Roth conversions.

As I understand the current proposed legislation, the limit is $150,000 for MFJ, so we should be good. BUT, there is always the possibility of lowering that limit in the final bill.

I almost feel guilty playing this game, but I don't make the tax laws.

FWIW, we owe a significant amount, so no refund in play.

I guess there is no downside to waiting until April to see what finally transpires, I just like to get taxes out of the way.

What are you folks doing?

 

[Easypick]

We are almost in the same situation as you income wise. We plan on waiting to file even though we have a small overpayment. (probably just apply to 2021 as we plan on doing more conversions)

 

[SecondCor521]

I feel similarly. I'd rather the game be different. But I take it as it is. I'll play because the dollars involved versus the planning time and effort is a good payoff for me.

Some in my tax sphere are filing early, some are filing late, to take best advantage of the rules.

I'm retired. I have the time to do the research and think things through.

Note that you can generally pay the full amount owed by 4/15 and get an extension to delay filing a return until 10/15. Also note that states can have different rules from the federal government.

 

[CardsFan]

I feel similarly. I'd rather the game be different. But I take it as it is. I'll play because the dollars involved versus the planning time and effort is a good payoff for me.

Some in my tax sphere are filing early, some are filing late, to take best advantage of the rules.

I'm retired. I have the time to do the research and think things through.

Note that you can generally pay the full amount owed by 4/15 and get an extension to delay filing a return until 10/15. Also note that states can have different rules from the federal government.

Yeah, I thought about the extension, if needed. But I expect this will probably be resolved before tax day.

 

[Finance Dave]

Our AGI is similar for both years, so no matter to us. But I do agree with you on one thing...you don't make the tax laws so use them to your advantage so long as you do it legally.

 

[Golden sunsets]

We are in the reverse situation. 2019 income exceeded the stimulus thresholds so we received no payments, but our 2020 income is less that 150k because we skipped the RMD's. We will receive a refund based on recapturing both stimulus payments as a credit on our 2020 return.

We just received our brokerage 1099 today so I am rushing our info to our tax preparer to get that 2020 return filed, ASAP, so that IF the next stimulus stays as proposed, we will get the check sooner, rather than have to wait till 2022.


So I can see your dilemma. I might wait if I were you. Seeing that you owe $$, why not wait till 4/14? Or if the situation isn't settled by then, file an extension (maybe make the estimated payment due though to avoid penalties)

 

[MRG]

Oh, I wasn't the only one thinking this?

 

[Aerides]

I would always wait until April to file if I owe, no matter other circumstances.

 

[CardsFan]

I would always wait until April to file if I owe, no matter other circumstances.

Normally I would e-file early, and then set the date for the payment (electronic transfer) around April 8.

 

[USGrant1962]

I'm doing the same, and thanks for the idea above about pay and request an extension.

 

[PatrickA5]

Only partially qualify based on 2019. Didn't do any conversions in 2020, so we'll qualify easily based on 2020 taxes. So, efiled earlier this week in order to "hopefully" be based on 2020 income. We shall see if this new stimulus actually happens and whether or not we filed early enough.

 

[scrabbler1]

We are in the reverse situation. 2019 income exceeded the stimulus thresholds so we received no payments, but our 2020 income is less that 150k because we skipped the RMD's. We will receive a refund based on recapturing both stimulus payments as a credit on our 2020 return.

We just received our brokerage 1099 today so I am rushing our info to our tax preparer to get that 2020 return filed, ASAP, so that IF the next stimulus stays as proposed, we will get the check sooner, rather than have to wait till 2022.

I am in your situation, too. I moved quickly to prepare and mail out my 2020 federal return yesterday. It's a brick, with 10 pages (single-sided). I didn't get the second stimulus payment of $600 because it was based on my higher 2019 income, so I took it as a credit on my 2020 return, allowing me to get a small refund which I am rolling over into 2021. I, too, hope the IRS processes that return before they send out whatever stimulus payment is determined from our lawmakers so I won't have to wait a whole year to claim it on my 2021 return.

 

[Golden sunsets]

I am in your situation, too. I moved quickly to prepare and mail out my 2020 federal return yesterday. It's a brick, with 10 pages (single-sided). I didn't get the second stimulus payment of $600 because it was based on my higher 2019 income, so I took it as a credit on my 2020 return, allowing me to get a small refund which I am rolling over into 2021. I, too, hope the IRS processes that return before they send out whatever stimulus payment is determined from our lawmakers so I won't have to wait a whole year to claim it on my 2021 return.

I wish you luck. I've heard nightmares about 2019 paper returns still not being processed due to remote work status of IRS staff.

 

[mrfeh]

Seems like people are assuming they'll use your most recent tax return to determine eligibility.

I don't know if that's the case or if they're gonna use 2019 returns regardless.

 

[Philliefan33]

Seems like people are assuming they'll use your most recent tax return to determine eligibility.

I don't know if that's the case or if they're gonna use 2019 returns regardless.

The checks have been sent (or not) so far based on income on the 2019 (or 2018) return because that was available. The eligibility is based on the 2020 income and is reconciled on the tax return. If you received too much you get to keep it, if you didn’t get enough the difference is added as a credit.

* we don’t know yet what income will be used for the next stimulus, if it happens

 

[mrfeh]

The checks have been sent (or not) so far based on income on the 2019 (or 2018) return because that was available. The eligibility is based on the 2020 income and is reconciled on the tax return. If you received too much you get to keep it, if you didn’t get enough the difference is added as a credit.

* we don’t know yet what income will be used for the next stimulus, if it happens

That's what I was referring to, as it is the topic of this thread.

 

[Golden sunsets]

Section 9601 of the proposed legislation (American Rescue Plan Act of 2021) deals with this issue. (https://assets.documentcloud.org/documents/20489001/house-democratic-covid-relief-bill.pdf) Of course we all know the final language after the dust settles can change. But the way I read it, the payment will be based on the 2019 return OR the 2020 return if it has been filed. There is language describing the "date of determination" which I don't fully understand, but it appears from my reading that the advanced payments will go out based on 2019 returns or 2020 returns if they have been filed and if the 2020 return has not been filed and a payment is therefore not made, it can be claimed on the 2021 return. This is not surprising as it seems entirely consistent with what was done with the last 2 payments, but in this case the year has been advanced by one. So as far as the OP's original question, if you qualified for 2019 but not 2020 and you have filed for 2020 will you get the payment, I'm not sure. Perhaps you might read the text to see if it is clear to you, OR just don't file 2020 until the final language is determined and your issue is clarified.

 

[ExFlyBoy5]

I moved quickly to prepare and mail out my 2020 federal return yesterday. It's a brick, with 10 pages (single-sided).

You may have moved quickly, but I don't think the IRS is going to be looking at your "brick" for quite a while.

Out of curiosity, why did you choose to mail it instead of e-file?

 

[scrabbler1]

You may have moved quickly, but I don't think the IRS is going to be looking at your "brick" for quite a while.

Out of curiosity, why did you choose to mail it instead of e-file?

I don't trust e-file; I have read enough horror stories about it here and in Bogleheads to confirm it. I have been doing my returns on paper and mailing them in for the last 36 years and have no plans to change it whatsoever. I did move to using fillable forms 7 years ago which has allowed me to more easily refer to and save them electronically.

I didn't get my first stimulus payment last year until mid-May, although I don't know if they had not processed my 2019 return already or had used my 2018 return anyway. I'd prefer hey took their time mailing out my check to give them more time to process my 2020 return.