Income tax planning: Additional stimulus money & Safe Harbor

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MJS
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Joined: Sat Aug 05, 2017 10:55 pm

Income tax planning: Additional stimulus money & Safe Harbor

Post by MJS »

My 2020 income will be substantially lower than 2019. The additional COVID19 Stimulus money will be claimed when filing my 2020 tax return next year. How does Stimulus money claimed in 2021 on 2020 taxes effect the Safe Harbor rule of owing the IRS less than $1,000? Does it effect Estimated Tax payments? Thanks!
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teen persuasion
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Re: Income tax planning: Additional stimulus money & Safe Harbor

Post by teen persuasion »

AFAIK, the stimulus checks sent out or direct deposited to most adults are an advance payment of a fully refundable credit (like EITC) on your 2020 tax return. So it is not income at all.

I expect the IRS to place it in the section of 1040 with other refundable credits (EITC, part of CTC, part of AOTC) and not with nonrefundable credits like the Retirement Saver's credit and part of CTC/AOTC.
Topic Author
MJS
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Joined: Sat Aug 05, 2017 10:55 pm

Re: Income tax planning: Additional stimulus money & Safe Harbor

Post by MJS »

teen persuasion wrote: Mon Jun 01, 2020 6:29 am
I expect the IRS to place it in the section of 1040 with other refundable credits (EITC, part of CTC, part of AOTC) and not with nonrefundable credits like the Retirement Saver's credit and part of CTC/AOTC.
Thank you! Having the categorization and vocabulary led me to "Those who project their 2020 tax bill to be under $1,000, after taking into account any withholding and refundable tax credits such as earned income credits and premium tax credits, ..."* so, yes, have additional Stimulus credit will (probably) reduce total tax due in April 2021.

* https://www.investopedia.com/articles/p ... s-2016.asp Italics mine.
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