stimulus check planning

[Lee B]

After they do the direct deposits, the experts say that the  IRS has the capacity to mail out 5 million checks a week.

At that rate the experts say it will take 16 to 20 weeks to mail out all of the stimulus checks , so this will be going on for some time.

[DANRVAN]

1 hour ago, North Idaho Rich said:

when will they stop looking for 2019 returns and calculate off the 2018 returns.

My guess is that it will be a one time search.  If no 2019 on record then go to 2018 and issue ASAP per section 6428(f)(3)(A)

[TKTax]

A  Q&A on thecollegeinvestor.com states that a surviving spouse that was MFJ will have to payback any  stimulus money received  for the deceased  husband. I could not find it in any of the resources.  Anybody else see anything on this?

[Lee B]

It would probably depend on when he was deceased.

If the husband passed away in 2019 and the stimulus rebate was based on the 2018 return ( $ 2,400 ), then $ 1,200  could

have to be repaid when she files her 2010 tax return ?

[Lion EA]

I thought the reconciliation does not go below zero on the 2020 return.

[DANRVAN]

22 hours ago, TKTax said:

  Q&A on thecollegeinvestor.com states that a surviving spouse that was MFJ will have to payback any  stimulus money received  for the deceased  husband. I could not find it in any of the resources.  Anybody else see anything on this?

The only reference I have seen to joint filing is in 6420(e)(2) which basically say that in the case of a joint return 1/2 of the credit will be attributed to each individual.

 

[DANRVAN]

21 hours ago, Lion EA said:

I thought the reconciliation does not go below zero on the 2020 return.

That is what I have read, no repayment.

I have a case where client's wife recently passes away.

Client wants to hold off on filing 2019 until the advanced credit is paid on 2018 return; in case the advance is reduced based on 2019 return indicating wife deceased.

As in other cases, I have made it clear that to him that although it appears he will not have to repay the excess, there is no guarantee of that.

[Lion EA]

Yep, telling clients the same, no guarantees. This is all new with rules being written on the fly. We don't know. Here's what we know, and you decide.

[Medlin Software, Dennis]

7 hours ago, DANRVAN said:

I have a case where client's wife recently passes away.

A death during 2020, that person should still be eligible, as far as I have seen.  TP passed on Pi day intestate.  Admin will not be appointed before the stimulus hits the still open bank account.  Assuming the 2020 return is filed on behalf of the TP, not the estate, the credit should apply.  Of course, the law text is subject to interpretation, and at least in other areas of the recent items, there has been license given to go with the intent of Congress, not the words they passed.

[DANRVAN]

50 minutes ago, Medlin Software said:

A death during 2020, that person should still be eligible, as far as I have seen.

I agree, there is assumption that deceased wife's share of credit will be allowed on final joint return for 2020; and no reduction of advanced credit based on 2019 1040 showing as deceased.  But to be sure, client is going to wait until check is in hand based on 2018 return.  

[Ringers]

I saw an article from Kiplinger written by a CPA who filed his 2019 return in February.

Based on his 2018 family income, he would have received a stimulus payment of $2900.

Based on his 2019 income he would not be eligible for any stimulus.

By filing early, he lost his stimulus payment of $2900 which, he claims, would not have been subject to repayment.

 

How will IRS be able to justify penalizing someone for filing early!!  If the current method stands, I do not expect any client in the future to allow me to efile their returns before April 15th of any tax year unless they are getting a refund!

 

 

 

[Gail in Virginia]

41 minutes ago, Ringers said:

I saw an article from Kiplinger written by a CPA who filed his 2019 return in February.

Based on his 2018 family income, he would have received a stimulus payment of $2900.

Based on his 2019 income he would not be eligible for any stimulus.

By filing early, he lost his stimulus payment of $2900 which, he claims, would not have been subject to repayment.

 

How will IRS be able to justify penalizing someone for filing early!!  If the current method stands, I do not expect any client in the future to allow me to efile their returns before April 15th of any tax year unless they are getting a refund!

 

 

 

But if, and it is a big if, I understand this correctly, he can now structure his income to get that $2900 when he files his 2020 tax return.  In which case the only thing that he lost was the time value of the money for approximately 9 to 12 months, which at an interest rate of .5% on $2900 can't amount to much. 

[Medlin Software, Dennis]

Those who can exert control over the timing and amount of their income (such as S Corp owner/employees) have always had some advantages if they put in the work to discover and use them.