Stimulus Check and 2020 Taxes Question

[giramomma]

I'm wondering if someone can speak/type real slowly and explain what I should expect for 2020 taxes.

So, for example, we qualify for the refundable credit portion of the CTC. Does that mean that amount goes down to a max of $900(1400-500)?

How does the adult portion work out?

[oped]

Yeah.. its clear as mud isn't it... I didn't think it was originally being described as an advance on our tax refund? But yesterday it was? 

[Deleted]

It's an advance refundable credit to be put on 2020 taxes.  It won't reduce the CTC as it's separate.  It will list the stimulus fund credit but be marked as already received. 

At least that's my understanding of it.

That's also why qualification for it might change because the income/age/dependent status might be different in 2020 than the 2019 (or 2018) return that they're using to calculate it now. 

[jeffreymo]

It has nothing to do with the child tax credit or any other credit. It will be “reconciled” on your 2020 return. So you are advanced the credit based on 2018 or 2019 AGI, but the true determination of whether you qualify will be determined by your 2020 AGI.

So there will be those that do not receive the stimulus advance because 2018/2019 AGI was too high but will instead get it on their 2020 tax return because their 2020 AGI is under the threshold. It seems like their could be a lot of people in this situation.



ETA: misspoke on claw back, it doesn’t appear that those who get the advance who exceed AGI in 2020 will have to return the funds on 2020 return

[Deleted]

Qualifying children will be based on 2020 as well, so people with a 16 year old on their 2019 taxes would get the extra $500 Stimulus Credit for that child, but then in 2020 you would have to pay it back because they're now 17.   Have a baby in 2020?  Doesn't get you the advance, but extra $500 credit next year. 

[tallguy]

Apr 5, 2020 8:32:50 GMT -5 jeffreymo said:

It has nothing to do with the child tax credit or any other credit. It will be “reconciled” on your 2020 return. So you are advanced the credit based on 2018 or 2019 AGI, but the true determination of whether you qualify will be determined by your 2020 AGI.

So there will be those that do not receive the stimulus advance because 2018/2019 AGI was too high but will instead get it on their 2020 tax return because their 2020 AGI is under the threshold. It seems like their could be a lot of people in this situation.

Or there will be those that receive the stimulus advance because they were under the AGI for 2018/2019 who turn around and have to pay back some of it on their 2020 return because they saw an increase to their AGI in 2020 that put them over the limit.

Where have you seen any indication that that is true?  Everything I have read says there is no clawback provision, and that you do not have to pay back the advance if you do not qualify in 2020.  Admittedly, I have not read anything about it in the last few days, but....

Also, both my GF and I will be in the situation of receiving the credit next year.  Large Roth conversions and early filing (because of travel) put us over.

[Deleted]

No clawback would be nice.  I just assumed since they said credits would be adjusted with 2020 return that it meant down as well as up. 

[teen persuasion]

No clawback.

As for the child portion, it's the age and dependency rule that mimics those of the CTC, but it's entirely separate. And there's nothing for those dependents age 17+ (so lots of HS and college kids like my DS4). No $1200, because a dependent, no $500 because > 17.

Next question everyone asks, does it count as income for taxes next year? No, it's a refundable tax credit that you got in advance (if you get a check/deposit) or you qualify for on your 2020 taxes.

If you won't get the advance check/deposit (not eligible by 2018 or 2019 AGI) but have reduced income now so will qualify on 2020 taxes, you could reduce your withholdings now to get it in your paychecks going forward, assuming you still have a paycheck coming in.

[giramomma]

Thanks all!!