Stimulus check: Why you may want to file your taxes immediately

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(NEXSTAR) – With a third stimulus check under negotiation in Washington, it may benefit some Americans to file their 2020 taxes as soon as possible this year.

Doing so could add money to a potential third stimulus check – or even to a Recovery Rebate Credit – depending on any changes in salary or dependents last year.

Since the IRS used 2019 returns to determine eligibility and stimulus check amount, someone whose salary exceeded the maximum threshold in 2019, but lost a job during the pandemic, might not be eligible for one of the proposed stimulus checks this year unless he or she submits a 2020 tax return before Congress reaches a deal.

The IRS opened tax season this year on Feb. 12, delaying it two weeks over stimulus payments and changes to tax laws.

Similarly, for Americans who had a child during 2020, there is a new dependent in their lives who qualifies for an Economic Impact Payment.

“I would suggest that people file as soon as possible, especially with 75% of taxpayers last year receiving a tax refund close to $3,000,” Lisa Greene-Lewis, a tax expert with TurboTax, told CBS. “We are hearing a lot of people say, ‘I had a baby in 2020, how will the IRS know this? When they issued the previous stimulus payment they didn’t know that.'”

But what about the people who never received their full stimulus payments from the first two rounds?

For the people still waiting on a stimulus check, keep in mind that eligibility and the amount of any Recovery Rebate Credit will be based on 2020 tax information, according to the IRS.

What happens in the coming months could change the calculus for people worried about receiving the correct stimulus amount, and it’s possible that the IRS could take action if Congress approves another round of checks during tax season.

When could Americans see a third round of stimulus checks?

President Joe Biden participated in a CNN town hall Tuesday night aimed at selling his $1.9 trillion coronavirus aid package directly to the American people.

It’s part of a White House effort designed in part to put pressure on Republican lawmakers and refocus Congress on speedy passage of the bill now that his predecessor’s impeachment trial is behind him.

The proposed package includes direct relief for most Americans in the form of $1,400 stimulus checks.

During Tuesday’s town hall in Milwaukee, Biden indicated he was open to negotiating some of the more controversial components of his place — like $15 minimum wage. Many Republicans have argued Biden’s plan is simply too expensive. Because of that concern, the process of approving the new president’s plan has moved slower than some hoped.

Whether you get a check depends on which direction Biden and Democratic leaders decide to go as the proposal makes its way through committees over the next few weeks with the goal of additional relief being finalized by mid-March. As of now, lawmakers are on break until next week.

The latest plan shows people earning $75,000 or less would receive the full $1,400 payment. That means a couple with an income below $150,000 would receive $2,800.

The checks would phase out a little quicker than previous rounds, according to that initial proposal. Individuals earning more than $100,000 and couples making more than $200,000 would not receive additional money. Just as we’ve seen with other rounds of direct payments, people who earn more than $75,000 but less than that $100,000 threshold would be able to collect smaller payments.

The draft includes payment eligibility for dependents — this time including college students. Previous rounds of stimulus didn’t include dependents over the age of 17.

Under the legislation, dependents would be eligible for a full $1,400 payment. That means a family of two parents and two children could receive up to $5,600.

Biden’s initial proposal called for a $115,000 cap — and other plans from lawmakers tossed around “phase outs” as low as $40,000.

“We can’t spend too much. Now’s the time we should be spending. Now’s the time to go big,” Biden said Tuesday night while discussing the size of his proposal.

Where the process goes from here remains to be seen as things could certainly change in the weeks ahead. Many hoped the end of the impeachment trial would mean a focus on relief. However, attention has shifted toward how the Jan. 6 attack on the U.S. Capitol occurred.

Democratic leaders have said they will take steps to form an independent investigative commission modeled after one that studied security failures before the 9/11 attacks.

The push for stimulus comes amid new signs of a weakening U.S. economy. Employers added just 49,000 jobs in January after cutting 227,000 jobs in December, according to the Labor Department. Restaurants, retailers, manufacturers and even the health care sector shed workers last month, meaning that private employers accounted for a meager gain of 6,000 jobs.

“Between six months and a year-and-a-half we can come back. We can come roaring back,” Biden said on Tuesday night.

The unemployment rate fell to 6.3% from 6.7%, but there was a decline in the number of people who were either working or looking for a job in a sign that some people are dropping out of the labor force. The U.S. economy is 9.9 million jobs shy of its pre-pandemic level.

The Associated Press contributed to this report.

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