Worth trimming 2020 income to reduce chance of clawback of stimulus check?

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rtom
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Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by rtom » Thu Mar 26, 2020 1:20 pm

Apologies if this is deemed too coronavirus-related, but in my judgment I am just asking a tax-related question.

DW and I had a relatively low income in 2018, a much higher income in 2019, and now a relatively low income for 2020.

Since we have not yet filed 2019 taxes, we expect to be eligible for stimulus checks, if the use 2018 return (AGI) as their criterion.

It's rumored that the stimulus might get clawed back based on 2020 AGI. To this end, I am thinking about switching my 2020 403(b) contributions from Roth to pre-tax.

Probably the most important consideration here, as in all Roth vs non-Roth decisions, is betting on future tax rates. I'm thinking we are now more likely to see higher future tax rates, so maybe I'll keep doing Roth contributions even if it might mean a partial clawback of stimulus money.

I don't want to let the tax tail wag my whole financial dog, but interested to see people's thoughts.

runner3081
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by runner3081 » Thu Mar 26, 2020 1:28 pm

People, we can't talk about pending legislation here!!!!

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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by oldcomputerguy » Thu Mar 26, 2020 1:34 pm

Absolutely correct. Discussion of proposed legislation is prohibited by forum policy. See Unacceptable Topics:
Note that discussions of proposed laws or regulations are prohibited.
The reason for this policy is that proposed legislation changes many times between being written and being signed into law. Depending on provisions of a proposed law that has not yet been finalized and signed into law may cause financial damage as the provision you counted on disappears from the final version.

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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by LadyGeek » Fri Mar 27, 2020 4:13 pm

The bill has been signed into law. This thread is reopened to continue the discussion.
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LilyFleur
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by LilyFleur » Fri Mar 27, 2020 4:15 pm

what is the 2018 AGI ceiling for eligibility for the first stimulus check?

Housedoc
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by Housedoc » Fri Mar 27, 2020 4:17 pm

We all sit around and complain about the national debt and wasteful government spending yet you are now trying to game the system to get all of your FREE money coming to you. Come'on Man

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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

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

^^. This.

The formula they used is way to generous. I’ll be getting quite a bit and we are both still fully employed.Wish they would have plowed every dollar into expanded unemployment.

I’m just going to hold on to it to help out my relatives who lost work.

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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

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


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Tamarind
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by Tamarind » Fri Mar 27, 2020 4:25 pm

I'll be donating the whole stimulus and then some to my local social services organization. Demand for food and rent aid is way up already and homeless services will be needed more than ever for those who fall through the cracks of this bill.

ShadowRegent
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by ShadowRegent » Fri Mar 27, 2020 4:25 pm

There is no clawback in the final law. You can, however, get an additional credit on your 2020 return if your 2020 income qualifies you for a higher amount.

terran
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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by terran » Fri Mar 27, 2020 4:31 pm

As others have posted, it sounds like there will be no clawback. If your 2019 income is too high to get the check then you should probably take advantage of the delayed filing deadline so the payment is base on your 2018 income and then you don't have to worry about your 2020 income.

Perhaps the bigger question is should you be contributing to Roth over traditional with an AGI of $75k single / $150k married or more?

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Re: Worth trimming 2020 income to reduce chance of clawback of stimulus check?

Post by spencer99 » Fri Mar 27, 2020 9:39 pm

Tamarind wrote:
Fri Mar 27, 2020 4:25 pm
I'll be donating the whole stimulus and then some to my local social services organization. Demand for food and rent aid is way up already and homeless services will be needed more than ever for those who fall through the cracks of this bill.
Yeah, me too. No judgment on anyone who acts differently. For me this this is selfish. I'll get way more satisfaction helping out my community than adding a small digit to the right of the decimal point of my portfolio.

S

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