To space out costs, Toasa said some clients may wait until next year to file an amended 2020 return. After that, determine whether it makes sense to proceed with an amended return. Toasa expects some clients will amend their returns at some point to take advantage of the chance at the EITC.īut Toasa has advice: Firstly, wait to the get the check in-hand instead of quickly sending in an amended return that could possibly cross the IRS’ own internal wires. In pre-pandemic times, it averaged around $150, he said. ”įor example, Diego Toasa, the owner of two ATAX tax preparation offices in New York City, said his average costs this year to file an amended return are around $100. “If a single parent with one child now made $41,000 a year instead of $40,000, they would only receive a $117 payout. The prospect of 2020 amended returns is “a big topic of conversation among preparers,” she said. That might be a wash if there’s tax prep fees to pay. If the theoretical single parent with one child now made $41,000 a year instead of $40,000 a year, they would only receive a $117 payout. The payouts can drop out fast as a taxpayer approaches the limit. Opting for an amended return is no different.įirst of all, amending a return will in all likelihood cost money - and, Speidel said, that could match or exceed the price of an EITC payout, depending on the person’s income, filing status and kids. Of course, few things are simple and easy when it comes to taxes. (Here’s one EITC calculator to game out potential payouts.) It might not be a simple chore That could be a critical bit of extra cash, she said. Suppose there’s a single parent who had a $40,000 adjusted gross annual income after the readjustment and suddenly became available for the EITC as a result.īy claiming the EITC in an amended return, Speidel said the parent could bring in $277 extra if they had one qualifying child, $1,562 if they had two children or $2,302 for three or more children. So what difference can that make? Potentially, a lot. $21,710 for married people filing jointly for people without qualifying children.$41,756 for people with one child and $15,820 or $47,646 for married filing jointly.$47,440 for people with two kids or ($53,330 for married filing jointly.$50,954 for people with three or more children or $56,844 for married filing jointly.(Remember, states may have their own rules on the tax treatment of the benefits.) If it’s above that number, subtract the $10,200/$20,400 from the adjusted gross income amount.įrom there, a taxpayer can see if they fall under the income limits to claim the EITC and determine whether to press ahead. If the number is below $10,200 (or $20,400 for joint filers), just subtract that number from your adjusted gross income. That’s the field for unemployment compensation. So how can a person know if they are in striking distance of the credit if they didn’t claim it? Start with some simple math, Speidel said.įirst, find Line 11 on the 1040 that’s been submitted to the IRS. (A taxpayer can know for sure if they have already claimed the EITC by seeing if Line 27 has been completed in their Form 1040.) “How can a person know if they are in striking distance of the credit if they didn’t claim it? Start with some simple math. A crucial bit of extra cashĪnyone who wants to access those credits based on their newly-reduced adjusted gross income will have to file an amended income tax return, the federal tax collection agency said. Though the IRS said it would automatically adjust returns based on the tax exclusion, it said it would not tweak those returns to apply for new tax credits if the underlying return didn’t already seek those credits. The IRS estimates on the 5.4 million taxpayers eligible for recalculation run through the end of February. The exemption applies to households making under $150,000 a year.Īround the time President Joe Biden signed the plan, approximately 66 million households had already submitted their tax returns, IRS statistics show. The income-tax exclusion is $20,400 for a married couple filing jointly. Unemployment benefits are taxable income, but the $1.9 trillion American Rescue Plan contained a provision saying the feds would not assess income tax on the first $10,200 a person received in jobless benefits. In certain cases, some people could hypothetically rake in around $1,000 to $2,000 extra, based on Speidel’s calculations. “It’s definitely worth just double checking,” said Christine Speidel, a professor and director of the Villanova University Charles Widger School of Law’s Federal Tax Clinic. “The American Rescue Plan said the feds would not assess income tax on the first $10,200 a person received in jobless benefits.
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