??Consolidated Appropriations Act, 2021 ?? - Timing for qualification?

Question

The Cares act had a $1200 tax credit tied to 2018 income (if 2019 wasn't submitted at the time), but then reconciled in the return for tax year

2020.

I'm looking at the current proposal, which I realize hasn't been signed off yet.

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Has anyone seen a summary that describes the timing here?

I've embarked on a multiyear plan of IRA conversions (Traditional to Roth). 2019 saw a large conversion. This year, 2020, by staying under the $150K (MFJ), I recaptured the $2400 along with $2500 in higher education credits. The marginal rate for the conversion would have been a 22/24 mix, but the loss of the $4900 along with medical deductions would have given a phantom rate quite higher.

I'd like to plan my 2021 as soon as I know what the new plan's timing is for qualification.

Alan · Accepted Answer

My interpretation of how the new Act amends the old act..... It works the same way. The $600 or less advance is based on 2019; 2018 if there is no 2019; SSA or RRB or SSI or VA benefits direct deposit if there is no 2018 or 2019 tax return and it is reconciled (Recovery Rebate Credit) on your 2020 tax return. So... even if you actually receive the advance in January 2021, you reconcile on your 2020 return.

They tweaked direct deposit. The first advance used a tax return that had a refund with direct deposit. That is still there. They added direct deposit of the advance for those individuals who paid 2019 taxes owed via direct debit to a bank account.

JoeTaxpayer · Answer

Thank you - I'm now starting to see  wording that confirms this. So, I'm expecting to see the 2020 tax software update by the time filing season opens.

??Consolidated Appropriations Act, 2021 ?? - Timing for qualification?

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