How will the stimulus work? (1 Viewer)

[Joan's E]

So I've read some summaries of these payments and they say it's based on 2019 taxes if you've filed them. If not, it's based on 2018 taxes. My wife says she read that it's going to be based on 2019 taxes regardless, so if you file your taxes AFTER receiving the money and are above the threshold, you will need to pay it back when filing your 2020 taxes.

Based on 2018 taxes, we should get the full amount. Based on estimated 2019 taxes (which I haven't filed yes) I would get nothing. So am I going to have to pay this back in 2021 or is it actually based on 2018?

Does that question make sense? Anyone know how this will operate?

 

[The moose]

That is the problem nobody does.

I suggest this thread so as people learn anything post it here.

Good luck guys.

 

[Farb]

Are you talking about the personal $1200 per person or the SBA loan package?

 

[NoPartyMike]

It's based on 2019 taxes if you've filed them. If you haven't, by the date they calculate your payment, it's based on your 2018 taxes. I've not read anywhere that you will have to pay it back next year, so I'm not sure where that idea came up. You may have to claim it next year as income and get taxed on it. I've not read either way on that. If you didn't file taxes in 2018 or 2019 you're not eligible for the payment. Also, it's based on Adjusted Gross Income, not Gross income, so you'd need to check that number to see what bracket you'll fall in. My AGI is much lower than my Gross.

 

[Lapaz]

It's based on 2019 taxes if you've filed them. If you haven't, by the date they calculate your payment, it's based on your 2018 taxes. I've not read anywhere that you will have to pay it back next year, so I'm not sure where that idea came up. You may have to claim it next year as income and get taxed on it. I've not read either way on that. If you didn't file taxes in 2018 or 2019 you're not eligible for the payment. Also, it's based on Adjusted Gross Income, not Gross income, so you'd need to check that number to see what bracket you'll fall in. My AGI is much lower than my Gross.

If you're correct that it could be based on 2018 earnings if you haven't filed a 2019 return, and you know that you'll earn more in 2019, then that creates a perverse incentive to delay filing your taxes, even if you have to pay a penalty. It doesn't make sense to me. It should be based on 2019 earnings, and you should have to pay it back if your earnings put you out of the bracket.

As an aside, because I think this thread will end quickly once someone reads the legislation, I'd like to also address in this thread the impact of this gigantic deficit spending. I think one of the impacts is that we will have to raise taxes to reduce the deficits in future years. If we don't, I think people around the world will start to move away from the dollar. It's been trending that way anyway, but the 3 to 7 trillion dollar deficit that we'll have this year is untenable. This orders of magnitude quantitative easing is untenable. The low yields on bonds is untenable. The next president will preside over a disastrous budgetary issue.

 

[Farb]

This shows why our elected leaders were foolish to always spend more than we paid them every time. This is one of the times that we actually need to create debt.

 

[NoPartyMike]

If you're correct that it could be based on 2018 earnings if you haven't filed a 2019 return, and you know that you'll earn more in 2019, then that creates a perverse incentive to delay filing your taxes, even if you have to pay a penalty. It doesn't make sense to me. It should be based on 2019 earnings, and you should have to pay it back if your earnings put you out of the bracket.

As an aside, because I think this thread will end quickly once someone reads the legislation, I'd like to also address in this thread the impact of this gigantic deficit spending. I think one of the impacts is that we will have to raise taxes to reduce the deficits in future years. If we don't, I think people around the world will start to move away from the dollar. It's been trending that way anyway, but the 3 to 7 trillion dollar deficit that we'll have this year is untenable. This orders of magnitude quantitative easing is untenable. The low yields on bonds is untenable. The next president will preside over a disastrous budgetary issue.

Yes, absolutely.

I've wondered this myself. I think the talk is that the feds will increase interest rates and recoup through the backing of loans. It will most certainly hurt the purchasing power of those that aren't wealthy. I also don't see a way around the weakening of the dollar.

Unfortunately, we don't have many immediate options to cushion the covid economical impact. I hope when the dust settles we'll take a hard look at our for profit healthcare industry, FDA efficiency, and war machine budget.

 

[JimEverett]

I am not a tax expert, but if it is a credit you get on your 2019 taxes then if you take the credit and exceed the income limit to receive the credit then it stands to reason you would be liable for the credit you received.

 

[Joan's E]

I am not a tax expert, but if it is a credit you get on your 2019 taxes then if you take the credit and exceed the income limit to receive the credit then it stands to reason you would be liable for the credit you received.

That's what I'm asking. If it's BASED on 2019 income, no matter what, then that's how it will operate. But if it's BASED on 2019 income only if you have filed taxes, and if not then it's BASED on 2018 taxes, then that would stand to reason that you would not have to pay anything back.

 

[V Chip]

This shows why our elected leaders were foolish to always spend more than we paid them every time. This is one of the times that we actually need to create debt.

You are correct, this is the time we need government to have the ability to go "over budget" to keep things going -- one of the many reasons (but a big one) that a "balanced budget" amendment is unneeded, as it would seriously hamper Congress' ability to create debt when the country needs it most.

Also one reason when things start to look better for government revenue, we shouldn't immediately look to cut taxes (as has been done with ill effect 3 times in the past 20 years), but rather reduce debt as a priority.

 

[JimEverett]

That's what I'm asking. If it's BASED on 2019 income, no matter what, then that's how it will operate. But if it's BASED on 2019 income only if you have filed taxes, and if not then it's BASED on 2018 taxes, then that would stand to reason that you would not have to pay anything back.

I just did a quick search cause it seems like a weird thing. Looks like the credit is actually for the 2020 year. And at least one source says you would not have to pay it back if your income was too large and you still received the credit:

And if it turns out your credit was too big when you file your 2020 tax return in 2021, you won’t have to repay the Treasury.

How Will The Coronavirus Stimulus Bill’s Individual Payments Work?

For many households, the most important provision of the massive $2.2 trillion stimulus bill passed by the Senate last night will be the individual cash...

www.taxpolicycenter.org

 

[Nebaghead]

This shows why our elected leaders were foolish to always spend more than we paid them every time. This is one of the times that we actually need to create debt.

Economy good = more taxes
Economy bad = lower taxes
Works the same when you aren't doing well financially for personal income. When you are broke, you cut back and go into debt a little bit. When you are doing well, you pay off your credit cards and save your money. With personal finances you can save money to keep things going for a 3-6 months. Government can't have a 1 trillion dollar rainy day fund.

Our economy has been inflated with tax cuts and low interest rates from the fed. Now that we need them to stimulate the economy there isn't anything left to cut. Negative interest rates? Negative tax rates? Trust me, Wall Street is making money no matter what happens.

 

[efil4]

This shows why our elected leaders were foolish to always spend more than we paid them every time. This is one of the times that we actually need to create debt.

ok so when taxes increase in the next few years, you will be ok because we clearly had no choice here?

right?

and let me be perfectly clear too...im all for individuals receiving help at this time.

Im NOT for United or Boeing receiving $50b dollars because they didnt have a rainy day fund, after posting $4b revenue per quarter.

but at some point, that debt becomes due. Has to be repaid for the next issue ( and there will be a next issue ).

 

[dtc]

If you're correct that it could be based on 2018 earnings if you haven't filed a 2019 return, and you know that you'll earn more in 2019, then that creates a perverse incentive to delay filing your taxes, even if you have to pay a penalty. It doesn't make sense to me. It should be based on 2019 earnings, and you should have to pay it back if your earnings put you out of the bracket.

As an aside, because I think this thread will end quickly once someone reads the legislation, I'd like to also address in this thread the impact of this gigantic deficit spending. I think one of the impacts is that we will have to raise taxes to reduce the deficits in future years. If we don't, I think people around the world will start to move away from the dollar. It's been trending that way anyway, but the 3 to 7 trillion dollar deficit that we'll have this year is untenable. This orders of magnitude quantitative easing is untenable. The low yields on bonds is untenable. The next president will preside over a disastrous budgetary issue.

borrow as much as you can. The solution to what they're doing is inflation.

It's not when, or if, but how much and how fast.

 

[dtc]

This shows why our elected leaders were foolish to always spend more than we paid them every time. This is one of the times that we actually need to create debt.

Yep and the last 3 years are a prime example.

If Trump had balanced the budget the 3T we just printed out of thin air would only have gotten us to where we were last month.

 

[dtc]

Yes, absolutely.

I've wondered this myself. I think the talk is that the feds will increase interest rates and recoup through the backing of loans. It will most certainly hurt the purchasing power of those that aren't wealthy. I also don't see a way around the weakening of the dollar.

Unfortunately, we don't have many immediate options to cushion the covid economical impact. I hope when the dust settles we'll take a hard look at our for profit healthcare industry, FDA efficiency, and war machine budget.

Interest rates will not be increasing any time soon.

Inflation will be decreasing the real value of the dollar, but I can't imagine it's going to be weaker relative to other currencies. That's very unlikely given a time of crisis like this.

Hopefully this will make us reconsider a few things though.

 

[wardorican]

Stimulus Checks Should Go Out This Week Or Next, Says Kudlow

Well, that's exciting.

www.forbes.com

 

[TxSaintFan]

Not getting a check due to 2018 income. Some of the employees I had to lay off are making more than they did working with the additional $600 a week plus unemployment, filing for the PPP to reopen my business has been quite the experience with all the changes since it rolled out.

You read about how crazy the government does things. It becomes very real when you deal with it.