Stimulus, Round Three
Welcome to Saving Money with Andrew!
Last week, as part of the ambitiously-worded American Rescue Plan Act of 2021, the IRS sent stimulus payments of up to $1,400 for individuals and $2,800 for married couples filing jointly, plus an additional $1,400 per claimed dependent. 90 million taxpayers received these payments automatically via direct deposit, while another 150,000 will receive checks in the mail.
These stimulus payments were broadly targeted, with full payments made to all Americans with an adjusted gross income below $75,000 ($150,000 for married filing jointly). In total, 89% of American taxpayers were eligible.
For the most part, you don’t need to do anything to receive your payment. The IRS determined eligibility based on the income on your last-filed return. You can also check the status of your payment on the IRS website.
But, for those Americans who didn’t automatically qualify based on their 2019 income but are now earning below the threshold (perhaps because of a COVID-related job loss or change of circumstances), you will have two additional opportunities to claim your stimulus payment based on your 2020 income (when you file your taxes this year - due date recently extended to May 17th) or your 2021 income (when you file taxes next year).
If you didn’t qualify for a payment based on your 2019 income, but are close to the threshold for 2020 or expect to be for 2021, you may want to consider options to reduce your adjusted gross income, such as contributing to an FSA or HSA if you are eligible, increasing contributions to a traditional 401(k) or IRA, or selling investments on which you have lost money (cost basis in excess of current value). As always, please consult an accountant or financial adviser when making a big decision like this.
And, for anyone who has received a large stimulus payment, please consider using it to reduce high-interest debt or fund a retirement or college savings account. But if you’re planning a trip for the summer (as most people seem to be), make sure to use some of these tips to Save Money on Hotels. And Please Don’t Trade Stocks.
And now…Andrew’s pick(s) of the week:
Since the United States has no other problems at the moment, I decided to focus on the scourge of changing the clocks for Daylight Savings Time. Twice per year, like clockwork (literally!), our children’s sleep patterns are messed up and my medical devices get confused. I never appreciate the extra hour of sleep in the fall as much as I deplore the lost hour in the spring.
Efforts to eliminate the time changes are farther along than you might think. 16 states have already passed laws to eliminate the practice once the federal government provides approval. And a bipartisan group of eight US senators have reintroduced legislation to end daylight savings changes forever by simply making current Daylight Savings Time permanent. It’s nice to see both parties working together on something. Next step, abolish the penny!
I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.