Stimulus checks are going out at full speed. Here's what you need to know about them.
Ever since the $1.9 trillion American Rescue Plan was signed into law back in mid-March, stimulus payments have been flying into Americans' hands at a rapid clip. In fact, approximately 164 million payments have been issued to date between direct deposits to bank accounts, physical checks, and debit cards. All told, the government has given out about $386 billion -- and it still has work to do.
Most recently, a batch of over 1.1 million payments was sent out, totaling over $2 billion in stimulus funds. About 600,000 of those payments came in direct deposit form, while the rest of those payments were sent out in the mail.
Are you still waiting on a stimulus check -- or a more generous one?
The IRS can only send stimulus checks to people it knows are eligible for that money. If you didn't file a tax return for 2020, the agency may not realize you're entitled to a payday. Or you may get stuck with a lower stimulus amount than you're eligible to collect.
If you filed a 2019 tax return, the IRS will use that information to determine what stimulus you're owed. But if your income has gone down since then -- which was the case for a lot of people last year -- then you may be entitled to a higher payout. The IRS will catch you up on what you're owed via a plus-up payment, but it can't do that until you submit your 2020 taxes so it can see what income you claimed last year.
In fact, the IRS will be issuing new stimulus payments on a weekly basis until it's confident everyone who's entitled to a payment has gotten one. The sooner you file your taxes, the quicker you can get your money.
Another benefit of filing a 2020 tax return? You may be in line for some lucrative tax credits that the IRS can only pay you for if it knows you're entitled to them.
The American Rescue Plan, for example, boosted the Child Tax Credit substantially. While that credit previously maxed out at $2,000 per eligible child, it's now worth up to $3,600. But if you don't file a tax return, you'll lose out on that money. Similarly, you may be entitled to another lucrative tax credit called the Earned Income Tax Credit, which is meant for lower-income filers. But the IRS can't issue your payout without a tax return on record.
Now the good news is that if you have an income of $72,000 or less, you're entitled to file your taxes for free. As such, you have little to lose by filing a return -- even if you weren't planning on doing one for the 2020 tax year.
Time to get moving
While the tax-filing deadline is coming up on May 17, you can still submit a return once the deadline has passed. In fact, if you don't owe the IRS money, there won't be any penalties for submitting your return late -- it's only filers who underpay their taxes who lose out financially by missing that deadline. Of course, filing by May 17 could get you your stimulus funds and other money sooner. And if you've been negatively impacted by the pandemic from a financial standpoint, it's definitely in your best interest to get that return done as quickly as possible.
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