Some high earners may delay filing taxes to get a larger stimulus payment — but it won't work for everyone

Shestock/GettyIf you wait to file taxes, you’re also delaying your refund.
  • Now that Americans have an extra three months to file taxes, some people are considering holding off on filing 2019 tax returns.
  • Since the IRS bases stimulus payments on your most recent tax filings, people whose income was lower in 2018 than in 2019 would wait to file so the IRS uses the 2018 income.
  • That way, they might get a bigger stimulus payment, provided their 2018 income fell within the qualifying range.
  • But waiting to file has a few downsides, including delaying your refund and making yourself vulnerable to identity thieves.
  • On the other hand, if your 2019 income completely disqualifies you from getting a stimulus payment but your 2018 income doesn’t, it could be worth holding off for a few weeks.
  • Ready to file your taxes? See Business Insider’s picks for the best tax software »

The coronavirus pandemic has caused (among many other things) the federal tax deadline to be pushed back to July 15, 2020.

Americans now have three more months to file and pay taxes. The relief feels substantial for those who dread the often tedious task, or those who don’t have enough cash to settle a tax bill right now.

Last week, the president signed a $US2.2 trillion stimulus package into law to bring more financial aid to individuals and families. The bill directs the IRS to send “recovery rebates” of up to $US1,200 to qualifying Americans, plus $US500 for each child 16 and under.

For anyone not receiving Social Security benefits, the one-time payments are calculated using adjusted gross income (AGI) reported on the latest tax return you filed, either 2019 or 2018. The IRS is aiming to get payments out to taxpayers by mid-April, but some it will likely take much longer for those without direct deposit.

It’s safe to assume everyone wants a payment. It’s no-strings-attached money that won’t be subject to income tax or have to be repaid later. But single-filers with an AGI above $US99,000, heads of household above $US136,500, and joint filers above $US199,000 will get nothing.

Some high-earning taxpayers who earned less in 2018 might be wondering whether it’s a good idea – or allowed, even – to hold off on filing 2019 taxes to get a bigger stimulus payment off their 2018 income.

The answer is yes, it’s possible to table your 2019 tax return until after you receive a stimulus payment, but there are a few things to consider.

Why it could be worth waiting to file your 2019 taxes

In an email to Business Insider, Riley Adams, a certified public accountant and the founder of personal-finance blog Young & The Invested, said the IRS is pushing to get stimulus payments out within the next three weeks – the same amount of time it would take to get your refund if the IRS were operating at normal speed.

If your 2019 income completely disqualifies you from getting a stimulus payment – as it did for Adams, who filed his return back in February – but you qualify under your 2018 income, it could be worth holding your return for a few weeks, he says.

“I think it makes sense to sit on filing because you can either get $US1,200 to $US3,650 (depending on filing status and family size with the assumption there are 2.5 kids per family on average) and your refund two to three weeks after that as well,” Adams said. “Or, if you earned above the stimulus check cap in 2019 (but not in 2018), you can file [now] and just receive your tax refund in two to three weeks”

Adams isn’t the only one to consider this option. Tax attorney Richard L. Lieberman told Bloomberg that “if somebody would be better served using a 2018 return than a 2019 return, then frankly they should use it.”

There are still 3 big reasons to file your taxes now

If you don’t qualify for a stimulus payment under your 2018 or 2019 income, there’s no reason to wait to file. Even if you do qualify, you might want to just go ahead and get your taxes filed.

Assuming you haven’t yet filed your 2019 federal tax return – which is now due on July 15 – there are at least three big reasons to do so.

First, delaying filing will also delay your refund if you’re owed one. The average refund this tax season is around $US3,000, which is more than twice the maximum individual stimulus payment. If you file electronically and request direct deposit, your refund should show up in your bank account within 21 days. As of now, the IRS says it’s still paying out refunds on schedule.

Second, experts typically advise filing your tax return as early as possible to prevent against identity theft. With three more months added to tax season, there’s more time for would-be scammers to take advantage.

Third, if the IRS doesn’t have your latest direct deposit information, it could take much longer to get a stimulus payment. According to a report by NBC News, it could take around 20 weeks for the IRS to issue checks to people who haven’t provided direct deposit information on their past tax returns. Filing now would help make sure the agency can deliver your money as soon as possible.

Ultimately, it’s a decision based solely on your personal finance situation and current needs. If you decide to file, act fast. We don’t know what cutoff date the Treasury will use to determine payments, but it’s moving swiftly to get money out to struggling Americans as soon as possible.

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