Will there be a third round of stimulus? While the White House and the Congress discuss such things, enough rumor is flying around that we need to plan for a potential third round of stimulus.
As many realize, the official start of tax season was much later this year – February 12 – partially because the IRS was busy trying to get out the first two rounds of stimulus payments.
But what if there is a third round? What does that mean for you?
So far this tax season, these are the scenarios we have seen:
- Clients received both rounds of stimulus
- Clients received no stimulus payments
- Clients received the first round, but not the second round
- Clients received the second round, but not the first round
How can there be such variation, you may wonder? Well, even if your 2019 return was filed early in tax season 2020, your first stimulus may have been calculated based upon your 2018 return.
But then it is possible your 2019 income tax return processed and then your second stimulus payment (or lack thereof) was based upon 2019 return.
That brings us to the topic at hand – do you file your 2020 return now when it is prepared (and all the forms available, of course)? Or do you wait to file?
Well, if your income is higher in 2020 than in 2019, and if you are close to the threshold being discussed (currently, this is $50,000 single and $100,000, married filing jointly), you may want to wait to file until your 3rd stimulus is in hand. Or in the bank. Or on a debit card. (Please note – this is still speculation – there is no actual 3rd stimulus as of right now when you are reading this).
But what if your income is lower in 2020? Well, then we want to get that return filed as soon as possible – again planning for the potential third stimulus.
If you thought your tax professional only deals with historical information, wrong! There are planning opportunities around every corner. If you are needing help with preparing your 2021 taxes or have any additional questions, feel free to contact a Henry + Horne professional.
Donna H Laubscher, CPA