Stimulus check from pandemic 2020

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youngatheart
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Stimulus check from pandemic 2020

Post by youngatheart » Wed Mar 25, 2020 8:02 am

Question:
Do we add the amount of a stimulus check to our income and pay tax on that?
Thanks in advance

ensign_lee
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Re: Stimulus check from pandemic 2020

Post by ensign_lee » Wed Mar 25, 2020 8:11 am

Doubt it. In 2008, it wasn't taxable income

student
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Re: Stimulus check from pandemic 2020

Post by student » Wed Mar 25, 2020 8:17 am

Not everybody will get one. From what I read, "Under the plan as it was being negotiated, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child. The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children."

orangecrushv
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Re: Stimulus check from pandemic 2020

Post by orangecrushv » Wed Mar 25, 2020 8:26 am

While we won't know until the text of the bill is released, I read that it was going to be "an advance against a tax credit", so not taxable income.

SimpleMan68
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Re: Stimulus check from pandemic 2020

Post by SimpleMan68 » Wed Mar 25, 2020 8:32 am

student wrote:
Wed Mar 25, 2020 8:17 am
Not everybody will get one. From what I read, "Under the plan as it was being negotiated, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child. The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children."
Does anyone know what year's tax return will be used to determine the AGI? 2018 or 2019? This could make a difference for some people. It will certainly make a difference for my family.

lessismore22
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Re: Stimulus check from pandemic 2020

Post by lessismore22 » Wed Mar 25, 2020 8:34 am

Hard to imagine they’d use 2019 as those aren’t due until July 15th now.

Millennial
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Re: Stimulus check from pandemic 2020

Post by Millennial » Wed Mar 25, 2020 8:35 am

CNBC reports 2018 agi

mervinj7
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Re: Stimulus check from pandemic 2020

Post by mervinj7 » Wed Mar 25, 2020 8:35 am

Folks, this is still pending legislation till it's signed, so I assume it's off limits for now on this forum. See previous thread.

viewtopic.php?f=2&t=309446&newpost=5131 ... ead#unread

Topic Author
youngatheart
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Re: Stimulus check from pandemic 2020

Post by youngatheart » Wed Mar 25, 2020 8:40 am

So Sorry, I see the reason for this and I apologize.

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Re: Stimulus check from pandemic 2020

Post by oldcomputerguy » Wed Mar 25, 2020 8:47 am

No worries. Yep, this topic is locked as discussing pending legislation. If/when the bill is signed into law by the President, at that point the impact of the new law may be discussed.
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Re: Stimulus check from pandemic 2020

Post by LadyGeek » Fri Mar 27, 2020 4:23 pm

The bill has been signed into law. This thread is reopened to continue the discussion.
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oneleaf
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Re: Stimulus check from pandemic 2020

Post by oneleaf » Fri Mar 27, 2020 4:24 pm

So if the IRS has your direct deposit information, you'll likely get it via direct deposit. What if you owed money and used direct debit? I hope that would work too?

mikep
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Re: Stimulus check from pandemic 2020

Post by mikep » Fri Mar 27, 2020 4:42 pm

If my 2019 income is lower than 2018, should I file taxes as soon as possible or is it already too late? Or will it all get trued up the same way once I have my 2020 income?

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Re: Stimulus check from pandemic 2020

Post by dwp456 » Fri Mar 27, 2020 4:54 pm

If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".

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Re: Stimulus check from pandemic 2020

Post by tibbitts » Fri Mar 27, 2020 4:58 pm

dwp456 wrote:
Fri Mar 27, 2020 4:54 pm
If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".
Yes, I hadn't thought of that when I did Roth conversions. It would be nice if it were excluded since it isn't really "new" income. I will be okay for 2018 and 2019, but for TY2020 (the coming Covid-some-other-number epidemic, of course) I might be in trouble.

hudson
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AGI or MAGI?

Post by hudson » Fri Mar 27, 2020 5:34 pm

In all the news articles that I've read, they say that the stimulus law is using the AGI or Adjusted Gross Income.
I haven't seen MAGI or Modified Adjusted Gross Income anywhere in any articles.
Which is it?

JimMolony
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Re: Stimulus check from pandemic 2020

Post by JimMolony » Fri Mar 27, 2020 5:48 pm

mikep wrote:
Fri Mar 27, 2020 4:42 pm
If my 2019 income is lower than 2018, should I file taxes as soon as possible or is it already too late? Or will it all get trued up the same way once I have my 2020 income?
That's what I did yesterday since my 2019 income was lower when I took the year off. No way my 2018 income would qualify me. Not sure it'll work but I had to do the taxes eventually anyway:)

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Re: Stimulus check from pandemic 2020

Post by JimMolony » Fri Mar 27, 2020 5:50 pm

tibbitts wrote:
Fri Mar 27, 2020 4:58 pm
dwp456 wrote:
Fri Mar 27, 2020 4:54 pm
If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".
Yes, I hadn't thought of that when I did Roth conversions. It would be nice if it were excluded since it isn't really "new" income. I will be okay for 2018 and 2019, but for TY2020 (the coming Covid-some-other-number epidemic, of course) I might be in trouble.
Hope it works but I kind of doubt it since it was reportable income and part of your AGI.

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Soul.in.Progress
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Re: Stimulus check from pandemic 2020

Post by Soul.in.Progress » Fri Mar 27, 2020 5:51 pm

NBC Today show the other day said that for people who have already filed 2019 taxes, they would use 2019 information, otherwise they would use 2018 information. But I don’t know what the cutoff date is for when you would have had to file 2019 for it to count.
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Dantes
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Re: Stimulus check from pandemic 2020

Post by Dantes » Fri Mar 27, 2020 6:04 pm

While it will be based on 2019 or 2018 tax returns, my understanding is that it will be treated as an advance on a refundable 2020 tax credit. Which is something else to consider when considering Roth conversions or other sources of optional income.

I assume, but do not know for certain, that someone who gets no check or a reduced check because of 2018 or 2019 income, but has less income in 2020 (which could be common), will realize the stimulus amount in their 2020 tax liability.

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Watty
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Re: Stimulus check from pandemic 2020

Post by Watty » Fri Mar 27, 2020 6:09 pm

I am no expert but my understanding is that that the money is actually an advance on a tax credit on your 2020 tax return that you will file in April of 2021. They way I understand it there are two questions;

1) Will you get an automatic deposit or a check based on your 2018 or 2019 tax return?

2) When you do your 2020 taxes will you get the tax credit? That could determine if you will get a big refund if you did not get the money already, or if you will have to pay it back. I don't know for sure but I would think this might be based on your 2020 income.

Here is an article I found about how it may work.

https://www.forbes.com/sites/jimwang/20 ... 2965ab10b9

terran
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Re: Stimulus check from pandemic 2020

Post by terran » Fri Mar 27, 2020 6:12 pm

mikep wrote:
Fri Mar 27, 2020 4:42 pm
If my 2019 income is lower than 2018, should I file taxes as soon as possible or is it already too late? Or will it all get trued up the same way once I have my 2020 income?
If your 2019 income would get you more than either 2018 or 2020, or you need the money now and 2019 would get you more than 2018 regardless of what happens in 2020 then I would file now. If 2020 will get you just as much as 2019 and you're fine waiting until you file in 2020 then I wouldn't worry about it.

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Re: AGI or MAGI?

Post by MikeG62 » Sat Mar 28, 2020 7:33 am

hudson wrote:
Fri Mar 27, 2020 5:34 pm
In all the news articles that I've read, they say that the stimulus law is using the AGI or Adjusted Gross Income.
I haven't seen MAGI or Modified Adjusted Gross Income anywhere in any articles.
Which is it?
I've also not seen anything reported which indicates they intend to use MAGI.

Perhaps that is because there is no single overall definition of MAGI. See here:

https://www.thebalance.com/modified-adj ... me-3193409

As a result, if they wanted to use MAGI they'd need to spell out which MAGI calculation. Probably too difficult for the legislators to deal with given the magnitude and scope of the undertaking.
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mortfree
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Re: Stimulus check from pandemic 2020

Post by mortfree » Sat Mar 28, 2020 7:38 am

AGI: Line 8b of the 2019 1040.

Per a New York Times article.

drdrgolf
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Re: Stimulus check from pandemic 2020

Post by drdrgolf » Sat Mar 28, 2020 7:47 am

Warning, the following is posted by a well intentioned guy.
The RMD has been waived for 2020 due to the pandemic. It seems that RMD based on 1/1/20 value of tax advantaged accounts would be too harsh considering the precipitous fall in value.
Dominic
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Re: Stimulus check from pandemic 2020

Post by aristotelian » Sat Mar 28, 2020 7:52 am

dwp456 wrote:
Fri Mar 27, 2020 4:54 pm
If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".
Sorry, if you have 150k taxable income you are not in need of the check. If you are doing Roth conversions in the 22% bracket that means you expect your future bracket to be even higher. The fact that some of this income is from previously untaxed savings is not really relevant. They are trying to target people who actually need the money and/or are likely to spend it. They are casting a wide net so it feels like everyone should get it but to be honest, they should have increased the benefit but set the threshold lower.

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Re: Stimulus check from pandemic 2020

Post by nps » Sat Mar 28, 2020 7:55 am

Watty wrote:
Fri Mar 27, 2020 6:09 pm
I am no expert but my understanding is that that the money is actually an advance on a tax credit on your 2020 tax return that you will file in April of 2021. They way I understand it there are two questions;

1) Will you get an automatic deposit or a check based on your 2018 or 2019 tax return?

2) When you do your 2020 taxes will you get the tax credit? That could determine if you will get a big refund if you did not get the money already, or if you will have to pay it back. I don't know for sure but I would think this might be based on your 2020 income.

Here is an article I found about how it may work.

https://www.forbes.com/sites/jimwang/20 ... 2965ab10b9
You will not have to pay it back.

alex11
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Re: Stimulus check from pandemic 2020

Post by alex11 » Sat Mar 28, 2020 8:12 am

Watty wrote:
Fri Mar 27, 2020 6:09 pm
I am no expert but my understanding is that that the money is actually an advance on a tax credit on your 2020 tax return that you will file in April of 2021. They way I understand it there are two questions;

1) Will you get an automatic deposit or a check based on your 2018 or 2019 tax return?

2) When you do your 2020 taxes will you get the tax credit? That could determine if you will get a big refund if you did not get the money already, or if you will have to pay it back. I don't know for sure but I would think this might be based on your 2020 income.

Here is an article I found about how it may work.

https://www.forbes.com/sites/jimwang/20 ... 2965ab10b9
The way I understand it:
1. If you have not filed your 2019 return, 2018 AGI will be used. If you have filed 2019, then 2019 AGI will be used. If you receive the full amount and your 2020 income goes beyond the threshold, you will not owe any money back.

2. If your AGI in 2018/2019 is above the threshold and you do not qualify for the stimulus check, BUT your 2020 income is within the income threshold you will receive the tax credit when you file in 2021(for 2020).

Seasonal
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Re: AGI or MAGI?

Post by Seasonal » Sat Mar 28, 2020 8:17 am

hudson wrote:
Fri Mar 27, 2020 5:34 pm
In all the news articles that I've read, they say that the stimulus law is using the AGI or Adjusted Gross Income.
I haven't seen MAGI or Modified Adjusted Gross Income anywhere in any articles.
Which is it?
The text of the law specifies AGI and does not mention any adjustments. Search for adjusted gross in https://www.congress.gov/bill/116th-con ... l/748/text
MikeG62 wrote:
Sat Mar 28, 2020 7:33 am
I've also not seen anything reported which indicates they intend to use MAGI.

Perhaps that is because there is no single overall definition of MAGI. See here:

https://www.thebalance.com/modified-adj ... me-3193409

As a result, if they wanted to use MAGI they'd need to spell out which MAGI calculation. Probably too difficult for the legislators to deal with given the magnitude and scope of the undertaking.
The easiest MAGI is the one for Medicare IRMAA - just add in tax-exempt interest. That's a single line on a 1040 and can be a very large number compared to AGI. It's a bit puzzling why they didn't do that.

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Re: Stimulus check from pandemic 2020

Post by Jags4186 » Sat Mar 28, 2020 8:20 am

aristotelian wrote:
Sat Mar 28, 2020 7:52 am
dwp456 wrote:
Fri Mar 27, 2020 4:54 pm
If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".
Sorry, if you have 150k taxable income you are not in need of the check. If you are doing Roth conversions in the 22% bracket that means you expect your future bracket to be even higher. The fact that some of this income is from previously untaxed savings is not really relevant. They are trying to target people who actually need the money and/or are likely to spend it. They are casting a wide net so it feels like everyone should get it but to be honest, they should have increased the benefit but set the threshold lower.
Every check sent out is a good thing. Had I not filed my 2019 return I would have received $2400. Since I filed my 2019 return I will receive $0. I would have spent the $2400 and a business would have benefitted. $1 additional received in stimulus money does not subtract $1 from someone else’s stimulus check. Therefore, it is perfectly reasonable to be salty about getting reduced or no check for being “responsible” and not waiting until the last second to file your 2019 return.

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LadyGeek
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Re: Stimulus check from pandemic 2020

Post by LadyGeek » Sat Mar 28, 2020 8:21 am

The wiki has some background info; there are many flavors of MAGI. See: MAGI
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Re: Stimulus check from pandemic 2020

Post by MikeG62 » Sat Mar 28, 2020 8:22 am

aristotelian wrote:
Sat Mar 28, 2020 7:52 am
dwp456 wrote:
Fri Mar 27, 2020 4:54 pm
If using AGI to determine eligibility, then the Roth conversions that I have done (both in 2018 and 2019) will really hurt me! My income falls within the "phase-out" zone, and the conversions have boosted my AGI to the point that I will get a lot smaller payment. Seems that they should exxclude this kind of "income" from consideration, since all I really did was move money I already had from "one pocket to another".
Sorry, if you have 150k taxable income you are not in need of the check. If you are doing Roth conversions in the 22% bracket that means you expect your future bracket to be even higher. The fact that some of this income is from previously untaxed savings is not really relevant. They are trying to target people who actually need the money and/or are likely to spend it. They are casting a wide net so it feels like everyone should get it but to be honest, they should have increased the benefit but set the threshold lower.
Agree. In my view they should have used the entire $300 billion in stimulus checks to enhance unemployment benefits (above what the legislation is already doing in that area) - to try and keep people whole (or closer to whole) who have lost their jobs or suffered a dramatic reduction in their pay. Giving money to people who have not been furloughed or laid-off makes little sense to me. This is not free money. The amounts borrowed by the government to pay this "stimulus" will eventually need to be repaid.
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cyclist
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Re: Stimulus check from pandemic 2020

Post by cyclist » Sat Mar 28, 2020 8:27 am

More interesting to me is the question of whether the checks will affect ACA cliff calculations.

If it’s true that they’re really advance credits for 2020 then it would appear that they don’t matter for the ACA, but it sure would be nice to get confirmation about that before I make my final IRA withdrawal for the year.

Cyclist

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Re: Stimulus check from pandemic 2020

Post by M.Lee » Sat Mar 28, 2020 8:29 am

drdrgolf wrote:
Sat Mar 28, 2020 7:47 am
Warning, the following is posted by a well intentioned guy.
The RMD has been waived for 2020 due to the pandemic. It seems that RMD based on 1/1/20 value of tax advantaged accounts would be too harsh considering the precipitous fall in value.
Dominic
Salute!
OMG, if this is true it is making my day. I found this on Forbes website. I hope this is consider a reliable site.

https://www.forbes.com/sites/ashleaebel ... 252542cb69

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nps
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Re: Stimulus check from pandemic 2020

Post by nps » Sat Mar 28, 2020 8:36 am

cyclist wrote:
Sat Mar 28, 2020 8:27 am
More interesting to me is the question of whether the checks will affect ACA cliff calculations.

If it’s true that they’re really advance credits for 2020 then it would appear that they don’t matter for the ACA, but it sure would be nice to get confirmation about that before I make my final IRA withdrawal for the year.

Cyclist
Technically they are treated as a taxpayer overpayment for tax year 2018 or 2019, whichever is used to calculate the amount. So it is not considered taxable income.

hudson
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Re: AGI or MAGI?

Post by hudson » Sat Mar 28, 2020 9:30 am

MikeG62 wrote:
Sat Mar 28, 2020 7:33 am
As a result, if they wanted to use MAGI they'd need to spell out which MAGI calculation. Probably too difficult for the legislators to deal with given the magnitude and scope of the undertaking.
I agree.
I speculate that they considered adding municipal bond interest because it's never been left out before.
Last edited by hudson on Sat Mar 28, 2020 9:37 am, edited 1 time in total.

hudson
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Re: AGI or MAGI?

Post by hudson » Sat Mar 28, 2020 9:34 am

Seasonal wrote:
Sat Mar 28, 2020 8:17 am

The text of the law specifies AGI and does not mention any adjustments. Search for adjusted gross in https://www.congress.gov/bill/116th-con ... l/748/text
Thanks for the link! I searched, and it was like you said...no mention of MAGI.
Last edited by hudson on Sat Mar 28, 2020 9:36 am, edited 1 time in total.

hudson
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Re: Stimulus check from pandemic 2020

Post by hudson » Sat Mar 28, 2020 9:36 am

LadyGeek wrote:
Sat Mar 28, 2020 8:21 am
The wiki has some background info; there are many flavors of MAGI. See: MAGI
Thanks LadyGeek!
Useful link! I only thought that there were two.
Someday, I hope to cross the IRMAA line. :)

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