By filing your tax return you could prepare yourself so that you don’t have to wait until 2022 to claim any additional money that Congress may approve during the rest of the year.
Although the deadline to file your tax return is April 15, this is not the year for you to procrastinate. If you haven’t filed your 2020 federal tax return there are four reasons to do it as soon as possible instead of waiting until the last minute.
This year your taxes will do more than just determine your tax refund if you get one, it’s also an important factor in calculating and receiving your next stimulus check.
For example, if you are one of the millions of people who received incomplete money for which you qualified as part of your first or second stimulus payment, or perhaps your check never arrived due to a clerical error or some other problem, it’s time to file your return. Some people had problems with child custody and support or lacked money for dependents in their care. Others have had funds accidentally garnished. Filing your taxes as soon as possible may help you reclaim the stimulus money you lost, regardless of the reason it wasn’t delivered.
About 8 million people who don’t file taxes will also have to file a tax return this year to get their stimulus payment, but there are also benefits for the tens of millions of people who will be eligible for a third stimulus payment of up to $1,400 per person.
By filing your return now you could set yourself up so you don’t have to wait until 2022 to claim any additional money Congress may approve during the rest of the year.
Here are 4 great reasons to file your taxes immediately:
The sooner you file your taxes you can get your refund faster. This is a great reason to file your taxes during the first few days each year before the deadline approaches.
Since the missing stimulus check money is also tied to your tax return on occasion filing early means you’ll be able to receive any missing stimulus money faster. If the IRS owes you a tax refund and the stimulus money, both will arrive as part of the same payment.
For example, let’s say your tax refund was $500 and your stimulus check was for $600. You would receive a single payment of $1,100 from the U.S. Treasury.
Conversely, if the IRS owes you the stimulus check payment and you owe taxes, the amount you owe will be reduced. If you owe $1,000 in taxes and are short $600 in stimulus check money, you will now owe only $400 instead of $1,000.
You will have the opportunity to set up the address so the IRS can make a direct deposit or correct any errors.
People with direct deposit accounts on file with the IRS have typically received their stimulus payments faster than those who receive the money in the mail. This mechanism will likely occur with the third stimulus check of up to $1,400 per person.
If you file your tax return right away you will have a better chance of receiving a full payment from a new stimulus check in 2021.
Under the latest stimulus bill the IRS would base your third payment on your 2019 or 2020 taxes or whatever you recently filed. Any money missing as part of the automatic payment would have to be claimed within one year on your 2021 taxes.
So let’s say you made less money in 2020 than you did in 2019, or you had a new baby in the last year, if the IRS calculates the amount on your 2019 living conditions, you would lose the rest of the check for a year or more until the agency processes your new data.