There is Still Time to Get Your "Trump Bucks" and "Lame Duck Bucks"

In December 2020, Congress passed a second round of Coronavirus stimulus that included direct payments to individuals.  The first round passed in March 2020 as part of the CARES Act.  For simplicity, I’ll refer to the spring payments as “Trump Bucks” and the most recent payments as “Lame Duck Bucks.”

Trump Bucks were up to $1,200 per adult taxpayer and up to $500 per child younger than 17, while Lame Duck Bucks are up to $600 per taxpayer or child younger than 17.

Depending on your family size and makeup, these combined payments could be quite substantial.  Both recovery rebates are actually 2020 income tax credits that may have been paid in advance.  If you received any of these advanced payments, be prepared to let your accountant know when you file your 2020 taxes.  If you did not receive these advanced payments, you may be eligible to receive them as a credit on your 2020 taxes; either to reduce the amount you owe or increase your refund.

The income thresholds for receiving the credits are $150,000 for joint filers, $112,500 if you file as head of household, and $75,000 for everyone else.  If your 2020 income is above these amounts, your maximum credit is reduced by $5 for every $100 you are over the limit.  The upper end of the phaseout depends on the amount of your maximum credit, which is based on the number of adults and qualifying children.

Payments were sent out based on 2019 income tax figures.  However, the credit is based on your 2020 income.  If your income in 2019 was too high to qualify and therefore you did not receive a stimulus check, you may be able to qualify based on your 2020 income if it is lower.  Conversely, if your 2019 income was below the income limits, but your 2020 income is above, you will not be asked to pay back the money you received.

There are a few groups caught on the outside looking in, watching their friends use their stimulus money to buy toilet paper, face masks, hand sanitizer, and yeast, while they did not receive their own payment.  Some of these groups include young adults claimed on their parent’s tax return in recent years and those with low incomes who are not required to file.

If you have young adult children, you should consider letting them claim themselves on their own 2020 tax return so that they can receive their full $1,800 stimulus money. This may make an impact on your own taxes, so you should ask your accountant to run the numbers and see if it costs you more than $1,800.

If you or someone you know does not usually file a tax return, claiming this credit should be a good reason to file for 2020.  Let’s make sure that everyone who is eligible gets the funds earmarked for them.