When should you file your taxes to maximize your potential stimulus? Local tax expert weighs in

The Biden Administration’s new proposed stimulus package includes $1,400 stimulus checks for Americans, based on how much they make. The Institute on Taxation and Economic Policy found that the benefits included in the bill would boost incomes for the poorest 20 percent of Americans by 33 percent.

Dr. John Tarwater, Associate Professor of Finance at Cedarville University spoke with News Center 7′s James Brown about the potential stimulus check.

The amount each American would get would be based on their latest tax filing. With that being said, Dr. Tarwater suggests that if you made less in 2019, instead of filing your 2020 taxes early, use your 2019 returns for eligibility.

“In the latest CARES Act, there was a provision made that if you were eligible for something like the earned income credit and your income was less than the current year, that you could use the prior year’s income rather than the current year’s income in order to maximize that credit,” Dr. Tarwater said.

On the contrary, as broken down by CBS News this week, those who made less in 2020 than 2019 may benefit from filing now. “That 2019 return might not reflect income losses during last year’s economic crisis or a new child, for example.”

Speaking of taxes, Dr. Tarwater list these three things as the top ones you need to know before filing your taxes this year:

• If you filed to receive the $1200 refund and the additional $500 for each qualifying child last year and did not receive it, you can claim that again this year.
• There is an above the line charitable tax deduction this year.
• You take the penalty associated with withdrawing funds from the IRA early over a three year period. “In essence, if you can pay the funds that you withdrew back over the three year period, you can avoid the penalty altogether,” Dr. Tarwater said.

Cox Media Group