Maybe somebody can explain this to me

"ttyymmnn" (ttyymmnn) 04/02/2020 at 11:06 • Filed to: None

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I do not understand financing. My mind closes up shop, and my eyes glaze over. That’s why my amazing wife does the taxes. My job is to rub her shoulders and keep her coffee cup filled.

Anyway, I was reading on !!!error: Indecipherable SUB-paragraph formatting!!! about the government’s pandemic payout, and they had this to say, which makes no sense to me.

The payments are essentially an advance on a credit against 2020 taxes. People who receive advance payments based on their 2018 or 2019 income but qualify for a bigger credit amount based on their income this year will receive the remainder of the credit amount to which they are entitled when they file their 2020 tax returns next year.

Recipients will not have to pay any money back to the government if their 2020 income is greater than their income in previous years, according to a Republican aide for the Senate Finance Committee.

Can one of you smarter people tell me  in layman’s terms what this means?

themanwithsauce - has as many vehicles as job titles > ttyymmnn 04/02/2020 at 11:15

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IIRC - a “credit” is the simple way of saying “take current tax you owe, now subtract this amount”. So if my income says I should’ve payed 10k in taxes, but I get a 1000$ credit, then I should’ve only payed 9k in taxes.

If you fill out a W-2, then your paycheck is automatically deducted a set amount for taxes. So let’s say you pay 1k a month in income taxes, we can set up the following scenario.

You payed: 12,000$ in taxes

You owed: 10,000$ in taxes

===

Your “Refund” is 2000$

Now applying the 1000$ tax credit....

You payed: 12,000

You owed: 9,000

===

Your refund is 3000$

============

Okay so now let’s put the final nail in this coffin and bury it. By paying that 1000$ in advance, your “refund” is still 3000$, but you got 1000$ today so you’ll only get 2000$ when you file your taxes for 2020.

But this doesn’t get into what happens if your income changes or marital status changes or anything like that......that’s beyond me.

ITA97, now with more Jag @ opposite-lock.com > ttyymmnn 04/02/2020 at 11:19

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The mechanics of this are it being a tax credit (below the line, so to speak) that we’re getting in advance. Normally this kind of tax credit (say something similar to buying an EV) would be paid (or offset amounts owed) when you file your 2020 taxes in early 2021. We’re getting the money early, with the amount based on 2018 or 2019 filings.

The last part of it works out that if someone is entitled to a bigger credit than their 2018/2019 returns indicate (because their income went down and/or they have more qualifying dependents), that additional amount will be paid when they file their 2020 tax return next year. If they turn out to qualify for less (say because they had significantly more income than 2018/2019), the extra amount paid won’t have to be paid back. This suggests it will work like the “bank error in your favor” card from community chest.

3point8isgreat > ttyymmnn 04/02/2020 at 11:20

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If you made a lot last year, you’ll get a smaller (or no) check. But if you make less this year than last year you will get a corrected amount back on your tax return for 2020. So say you only qualify for $800 based on last year’s income , out of $1200. But then your income drops this year to an amount that would have qualified for the full $1200. When you do your taxes next year you will get that $400 difference back.

If you qualify for the full $1200 based on last years income, you get $1200 now.  If you make MORE this year, you just keep the whole $1200 and don’t pay anything back.

MasterMario - Keeper of the V8s > ttyymmnn 04/02/2020 at 11:20

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It means they are using your 2019 income and status to calculate what you will receive , but will adjust it for your 2020 status once you file taxes next year.

For example, if you are married already but had or will have a child this year and make under the married couple limit you would receive $2400. But that child is worth an additional $500, so come 2021 when you file this years taxes you will get that additional $500.

Also, if you qualified for more money based on 2019 income than 2020 income you will not need to repay that money.

The Ghost of Oppo > ttyymmnn 04/02/2020 at 11:21

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People who receive advance payments based on their 2018 or 2019 income but qualify for a bigger credit amount based on their income this year will receive the remainder of the credit amount to which they are entitled when they file their 2020 tax returns next year.

So $75,000 is the cut off to get the $1,200, then there is a reduction scale up to $99k, but I can find the exact scale anywhere. So let’s say you made $80,000 in 2019 and let’s also say making that $80k entitles you to a $1,000 payment. If you make less than $75k this year for one reason or another, you will get that extra $200 when you file your 2020 tax returns.

My bird IS the word > themanwithsauce - has as many vehicles as job titles 04/02/2020 at 11:21

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Wait, do es this just mean I am getting next years tax return right now? I'm not actually "getting" anything more than what I already was?

Chuckles > themanwithsauce - has as many vehicles as job titles 04/02/2020 at 11:22

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“Recipients will not have to pay any money back to the government if their 2020 income is greater than their income in previous years, according to a Republican aide for the Senate Finance Committee.”

I think that part is talking about the income thresholds. Like you get the full 1200 i f you make less than 75,000. But they are basing that off of 2018 or 2019 taxes. If you get a raise this year that pushes you from 70,000 to 80,000 salary for 2020, you won’t be punished next year for having been already given the full 1200.

BrianGriffin thinks “reliable” is just a state of mind > ttyymmnn 04/02/2020 at 11:25

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Stay with me here.

The payment is a 2020 tax credit, but we’re paying it to taxpayers early based on 2019’s (typically) AGI.

So if you qualify right now, you get your $1200. That payment will be a credit shown on your 2020 return, but will be offset pay the credit already paid out - so a net zero. Your refund would be whatever it would have been if the stimulus never existed.

However, if you don’t qualify right now because 2019’s AGI was too high, but 2020’s was lower, you’ll get the credit on your 2020 return and either receive a bigger refund or pay less tax. 

Rusty Vandura - www.tinyurl.com/keepoppo > ttyymmnn 04/02/2020 at 11:26

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I thought the IRS paragraph made more sense than the explanations below. But my take is that the trillions they’re handing out the aren’t really handing out at all, but giving us our allowance early.

themanwithsauce - has as many vehicles as job titles > My bird IS the word 04/02/2020 at 11:27

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Yes/no. Your refund should be the same as it was, if nothing else changes, when you file in 2021. But the way the behind the scenes math works - your refund will be bigger by this payment amount, they’re just giving it to you now instead of making you wait until filing time. So in 2021, your 2020 taxes will be, on paper, reflective of an extra 1200$ credit.

Chuckles > My bird IS the word 04/02/2020 at 11:27

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No, it means that in addition to your return next year, you are getting an additional credit that they are paying out now.

user314 > ttyymmnn 04/02/2020 at 11:27

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It’s very simple. You see....

Um.... So if...

BrianGriffin thinks “reliable” is just a state of mind > The Ghost of Oppo 04/02/2020 at 11:27

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There’s a calculator, but basically: at $99k you get nothing, at $98k you get $50, $97k gets you $100... , and it scales by $50 per $1000 in income.

The Ghost of Oppo > BrianGriffin thinks “reliable” is just a state of mind 04/02/2020 at 11:29

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Okay thanks. You wouldn’t believe(or maybe you would!) how many articles I’ve read that just gloss over or don’t even mention the actual figures.  Most of them don’t even mention this is just an advance on your 2020 refund.  

ttyymmnn > user314 04/02/2020 at 11:30

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That pretty much symbolizes my brain right now. Even after reading the explanations. I think maybe Rusty put it in a way I can understand it. 

Khalbali > My bird IS the word 04/02/2020 at 11:31

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I t’s still an extra credit towards 2020 taxes that you wouldn’t have gotten otherwise, so you are still getting more than you would have, and also getting it earlier than when you file 2020 taxes. But the $1200 tax credit didn't exist before the covid bill so it is still extra money, but say you made 150k last year, you get nothing now, but if you end up making 60k this year, then you get that $1200 credit as part of your tax return instead of now.

For Sweden > ttyymmnn 04/02/2020 at 11:34

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What’s happening is the pandemic is turning us all into libertarians

You could do all your taxes on a postcard

Chariotoflove > ttyymmnn 04/02/2020 at 11:34

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This is over and above your normal refund. I think this tax credit was a stimulus package for next year that they retooled to start this year instead. My guess is that when they see the economy still needs goosing in six or eight months, they may enact another tax credit to replace the current  one we will not be getting next year.

BrianGriffin thinks “reliable” is just a state of mind > The Ghost of Oppo 04/02/2020 at 11:48

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Just a point of clarity - it’s * not* an advance on your 2020 * refund* (technically), it’s an advanced credit. So if you were going to owe $2000 for 2020, had the stimulus NOT been paid out, you would have only owed $800. But if you’re receiving payment, your $2000 bill will stay the same.

dumpsterfire! > For Sweden 04/02/2020 at 12:01

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Hmmm. Government "giving" residents money, covering cost of medical tests, propping up the business economy with a trillion dollars US. Sounds less libertarian and more socialist to me.  

Khalbali > ttyymmnn 04/02/2020 at 12:07

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Its a tax break that they’re sending out now based on last year’s info. If you get less than you should now then you get the rest on next year’s tax return , if you get more than you should they won’t take it back. Either way it’s more money than you would have gotten, assuming you’re under $100k income.

Wobbles the Mind > ttyymmnn 04/02/2020 at 12:08

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They are taking some of your tax credit for next year and paying it to you this year. It’s the easiest and fastest way to hand out tax free money. There will weirdness filing next year, but that’s next year’s problem.

Future next gen S2000 owner > Rusty Vandura - www.tinyurl.com/keepoppo 04/02/2020 at 12:11

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Considering the reworked the tables....my “ allowance” was a check to the gov’t last year.

The Ghost of Oppo > BrianGriffin thinks “reliable” is just a state of mind 04/02/2020 at 12:11

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Right, credit. I just still see a ton of people who think this is totally free money because they see the phrase that this payment “ won’t be taxed”

For Sweden > dumpsterfire! 04/02/2020 at 12:12

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That part is socialist

The “Why do I have to wait a year for a vaccine just stick a needle in me” is libertarian.

Future next gen S2000 owner > ttyymmnn 04/02/2020 at 12:12

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That is a horrible explanation. It should be much simpler, here’s your check for 2K, and here’s yours...and yours.. and yours. No back pay, no taxes, no credit. Just spend the stupid thing.

Rusty Vandura - www.tinyurl.com/keepoppo > Future next gen S2000 owner 04/02/2020 at 12:18

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I’m really skeptical of this so called bailout. They’ll say they’re “giving” us all this or all that, but in the end, they’ll take it back some other way.

Future next gen S2000 owner > Rusty Vandura - www.tinyurl.com/keepoppo 04/02/2020 at 12:19

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At some point in the coming decades we’ll just have to significantly raise taxes. I’ve accepted it. Our deficit is significantly outpacing GDP growth. It’s only a matter of time.

Rusty Vandura - www.tinyurl.com/keepoppo > Future next gen S2000 owner 04/02/2020 at 12:27

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Is it reasonable to say that the current administration has jacked up the deficit an inordinate amount?

fintail > ttyymmnn 04/02/2020 at 12:39

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In other words, nothing is free unless you are among the top few, or are a business who is a person too.

fintail > Future next gen S2000 owner 04/02/2020 at 12:40

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It could have been a no-strings package, but the hardworking self-made Horatio Alger Rs don’t want to turn people into “takers” or some such bs.

Future next gen S2000 owner > Rusty Vandura - www.tinyurl.com/keepoppo 04/02/2020 at 12:48

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They contributed to it, yes. The current administration has added more debt than the previous. It really dates back to the Regan administration. That point shifted to constant deficit spending.

Future next gen S2000 owner > fintail 04/02/2020 at 12:51

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I’m about died in the wool R as anyone I know but even I’ll allow that if the govern ment removes your ability to earn money, through no fault of your own, for the benefit of society, they should send you a damn check.

I find I’m disagreeing more and more with R’s in congress every day.

Thomas Donohue > ttyymmnn 04/02/2020 at 13:03

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Long story short:

‘ Every’ person who made under $75,000 in tax year 2019 i s getting a check this year for $1200.

If you haven’t filed your 2019 taxes yet, they will estimate using your 2018 numbers.

If you end up making more than $75,000 when you do file your 2019 return , then you weren’t really eligible, and will owe all or some of that $1200 back to the government. That money will be deducted from your 2020 tax return.

Short story longer:

** if you do not get a check because you made over $75,000 in 2018, but end up making less than $75,000 in 2019, you’ll get a $1200 credit on your 2020 taxes next year.

That’s how I believe it’s supposed to work.  

fintail > Future next gen S2000 owner 04/02/2020 at 13:04

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A no-strings check as well . Maybe in Stimulus II, which will probably be a real thing by the end of next month.   Something big is going to needed for both mortgages AND rent if this continues.  But I won’t hold my breath, it was some “capitalist” Rs trying to hold up the current package, and they will do it again, whining about others getting something for free while they themselves usually haven’t worked a day in their lives and have a taxpayer funded meal ticket and a relative life of luxury til they die.

This aint the party of Eisenhower or even Nixon, for sure. The latter looks like Abe Lincoln in comparison to these pieces of crap.

Thomas Donohue > dumpsterfire! 04/02/2020 at 13:08

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If we spent as much energy preparing and fighting the pandemic as we do trying to put names and labels on every single thing anyone does, we’d have a very low infection rate and a more effective, unified response.

Instead, we fight/blame/label/argue/repeat and hardly get anything done.

Chuckles > The Ghost of Oppo 04/02/2020 at 13:11

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To you, the person receiving the $1200, it effectively is free money. It’s not money that you were going to get prior to this bill. The government is basically saying “Good news! We’ve decided to give everyone an extra $1200 on their tax return in 2020, but we’ll be nice and hand it out now.”

BigBlock440 > Future next gen S2000 owner 04/02/2020 at 13:15

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The current administration has added more debt than the previous. 

Huh?  This ain’t 2012.  I’m not sure if it includes the extra 2T, but the debt added under the current administration is “only” 3T, which is a far cry from the nearly 10T added under the prior administration.

Chuckles > BrianGriffin thinks “reliable” is just a state of mind 04/02/2020 at 13:16

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There seems to be some disagreement in the comments on if getting 1200 now means getting 1200 less on your tax return next year. It's my understanding that this bill created an additional tax credit of 1200 for next year, and they're just paying it out now. So for the end recipient, this is 1200 that they were never going to see prior to the creation of this bill. Does that sound right?

ttyymmnn > Thomas Donohue 04/02/2020 at 13:24

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I get that, but what confuses me is the business about how this works with the tax credit for next year. 

My bird IS the word > themanwithsauce - has as many vehicles as job titles 04/02/2020 at 13:26

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Ok. The way it sounded for a second there... 

Thomas Donohue > For Sweden 04/02/2020 at 13:27

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The former Speaker keeps a pretty low profile these days....

Damn.....you’d think he was looking at Ronald Reagan there.

Future next gen S2000 owner > BigBlock440 04/02/2020 at 13:30

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We both ar ea bit wrong. I was thinking later in Obama’s term. His annual deficits were less than Trump’s annual. 2017-Present Trump’s deficit is 4.5, 09-16 Obama ran a total of 7.5.

https://www.thebalance.com/us-deficit-by-year-3306306

ITA97, now with more Jag @ opposite-lock.com > ttyymmnn 04/02/2020 at 13:31

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Rusty's was close.  This an extra allowance, and we're getting it early.  And, if folks get too much allowance, they won't have to pay it back.  If they get too little allowance, they'll get the rest later when they file their 2020 tax return.

Thomas Donohue > ttyymmnn 04/02/2020 at 13:36

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T he check, if you get it, IS the tax credit for next year. They are just giving it to you early.

If you ge t a check (and were eligible) , then you won’t get an additional $1200 credit on your taxes in 2020 because you already got it.

If you don’t get a check (and you WERE eligible) then you’ll get the $1200 credit on your tax return in 2020.

If you get a check (and it turns out you were NOT eligi ble) then you won’t get the credit in 2020, and will owe the $1200 back.

The Ghost of Oppo > Chuckles 04/02/2020 at 13:42

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Are you sure about that? As I understand it it’s an advanced tax credit, not an additional and advanced tax credit.

Rusty Vandura - www.tinyurl.com/keepoppo > BigBlock440 04/02/2020 at 13:52

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The answer to that question is sort of what I was after. I'd be curious to somehow compare the spending of governments back to Reagan, but I question whether anybody could be objective about the comparison. Or whether anyone really knows.

Chuckles > The Ghost of Oppo 04/02/2020 at 13:57

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I'm not sure of anything at this point. But I thought that the point of the CARES act was to give people money that they wouldn't be getting otherwise, in an attempt to help the economy and to help people struggling with bills. Giving everyone an advance on next year's tax return doesn't really help much in the long term. But giving people an extra 1200 that they weren't getting otherwise would make a bit of a difference. 

For Sweden > Thomas Donohue 04/02/2020 at 14:08

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literally me rn

The Ghost of Oppo > Chuckles 04/02/2020 at 14:10

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Okay now I think you are correct, but I even have Oppo proof of why I thought it was nothing more than an advance.

K-Roll posted a Yahoo finance article on sunday , and I even quoted it verbatim in my comment “the check you receive is really just an advanced payment of a tax credit for the 2020 tax year.” BUT NOW, the article has been updated to say “ the checks that will be sent now are really just advanced payments of a new 2020 tax credit.” So even journalists who supposedly specialize in financial news can’t seem to get it straight.

Chuckles > fintail 04/02/2020 at 15:46

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I think this is effectively free money for most people. All the talk about tax credits next year is just how they make the math work. But they are giving everyone* an additional tax credit for 1200 next year , and they’re handing it out now. This credit did not previously exist, so it’s not like they’re taking it out of the tax return you were expecting.

*not everyone, but most people under the income threshold.

fintail > Chuckles 04/02/2020 at 16:06

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Oh, I didn’t realize the additional next year tax credit. Nice, thanks for the info.

I swear I recall the Dubya era stimulus gift had some kind of tax repercussion, but it has been a long time.

Chuckles > fintail 04/02/2020 at 17:03

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It's entirely possible that I'm wrong, but this certainly would be a lot of hullabaloo if it boiled down to "getting next year's money early" if it didn't include receiving additional money over the normal amount. To the best of my knowledge, the CARES act makes it so that any qualifying person gets an extra 1200 that they were never going to see before this became a bill.

fintail > Chuckles 04/02/2020 at 17:31

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Just from what I know of the Rs , and to a lesser extent establishment Ds, I could see it, as we don’t want socialism dontchaknow. I know some of the so-called right were incensed at extra UI provisions. I hope you are correct (I assume you are) , and that this and the further stimuli are without strings for ordinary people.

SilentButNotReallyDeadly...killed by G/O Media > ttyymmnn 04/02/2020 at 18:14

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I believe it's something akin to robbing Peter in order to pay Paul...

dumpsterfire! > Thomas Donohue 04/02/2020 at 18:21

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Don’t mind me, I’m just taking a break from seeing and t reating co ughing sick people all day to shitpost a little.

BrianGriffin thinks “reliable” is just a state of mind > Chuckles 04/02/2020 at 18:30

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You’re correct, it’s a “free” $1200 credit that was added to the credits section of the 2020 income tax return. It will not change the underlying tax assessment for 2020 nor change the net tax due, nor is it money being pulled from somebody’s withholding.

Thomas Donohue > dumpsterfire! 04/03/2020 at 11:09

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Stay safe!