How the timing of your tax return could affect your third stimulus payout

How the timing of your tax return could affect your third stimulus payout

The much anticipated third stimulus check is supposed to give people a financial lift during the pandemic.

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Why some should wait to file taxes

Obviously, rushing to file a 2020 tax return now is not good strategy for everyone.

If, for example, you found a much higher paying job in 2020 than 2019, you could be better off waiting, depending on your income. Or maybe you got a big bonus in 2020.

“If a taxpayer had the opposite situation, with $75,000 of adjusted gross income on the 2019 tax return but $100,000 of adjusted gross income on the 2020 tax return, they would be better off holding off on filing their 2020 tax return to let the IRS base the advance payment on 2019 adjusted gross income,” Luscombe said.

And are you really prepared to file a return early in the game?

Taxpayers don’t want to rush into filing a return in February or March, just to file as soon as possible, according to Ken Corbin, the new IRS chief taxpayer experience officer, a newly created position that is designed to better help the agency address taxpayer problems. Corbin also serves as commissioner for the IRS wage and investment division.

The best bet is generally to avoid any mistakes and file when the correct paperwork and information that you need are available.

If you don’t have the correct W-2 forms or 1099s now, for example, the return is likely to face delays in processing. It’s best to file when you have a complete tax return.

“We always encourage taxpayers to file the most accurate return they can,” Corbin said.

Source: Yahoo Finance

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