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Financial and Tax Insights

2020 Tax Changes

Who's Eligible for the second round of Economic Impact Payments?

Generally, if you’re a U.S. citizen or U.S. resident alien, you may be eligible for $600 ($1,200  for a joint return), plus $600 for each qualifying child, if you (and your spouse if filing a joint return) aren’t a dependent of another taxpayer on a 2019 tax return, have a social security number (SSN) valid for employment (see exception when married filing joint) and your adjusted gross income (AGI) does not exceed:

  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $112,500 if filing as head of household; or
  • $75,000 for eligible individuals using any other filing status

Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above.

You aren’t eligible for a payment if any of the following apply to you:

  • You were claimed as a dependent on another taxpayer’s 2019 tax return (for example, a child or student who may be claimed on a parent’s tax return or a dependent parent who may be claimed on an adult child’s tax return).
  • You don’t have an SSN that is valid for employment issued before the due date of your 2019 tax return (including any extensions).
  • You’re a nonresident alien.
  • People who died before 2020.
  • Are an estate or trust.

However, you may be eligible to claim a Recovery Rebate Credit on line 30 of your 2020 tax return. Please refer to the instructions for the 2020 Form 1040 for more information.

New Charitable Deduction Allowance

New this year, taxpayers who don't itemize deductions can take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations

Recovery Rebate Credit/Economic Impact Payment

Taxpayers who received an Economic Impact Payment, should keep Notice 1444, Your Economic Impact Payment, with their 2020 tax records. They may be eligible to claim the Recovery Rebate Credit on their tax year 2020 federal income tax return if:

  • they didn't receive an Economic Impact Payment, or 
  • their Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018), plus $500 for each qualifying child they had in 2020.

If a taxpayer didn't receive the full amount of the Economic Impact Payment for which they were eligible, they may be able to claim the Recovery Rebate Credit when they file in 2021. Individuals do not need to complete information about the Recovery Rebate Credit on tax year 2020 Form 1040 or 1040-SR when filing in 2021, unless eligible to claim an additional credit amount.

Economic Updates

Monday Morning Outlook

Here are a few recent examples of the types of economic, wealth management, and tax information that we send out every week to our newsletter subscribers. If you too would like to recieve these timely insights directly to your email, please sign up at the bottom of the page.  
 

01/11/2021 - Elections Have Tax Consequences

01/04/2021 - Keeping Good State Policies

12/28/2020 - Inflation, Debt, MMT, and Bitcoin

12/21/2020 - Greedy Innkeeper or Generous Capitalist?

12/14/2020 - Stimulus, Bailouts, and the Fed

12/07/2020 - 2021: Robust Growth, Higher Inflation


To read more economic updates, click here