With the US sorting thru the big problems of Covid-19 and now a huge stimulus/emergency fund with payments soon available to you, what does it mean for your unfiled tax returns or back taxes owed?
1. Haven't Filed Taxes? As we have previously recommended if you haven't filed taxes in a long time, you should consider two paths: filing six years, 2014 to 2019, to get into "full compliance" or four years, 2016 to 2019, to just focus on available refunds.
* Your 2016 tax refund is actually available UNTIL July 15, 2020!
* To get the $1200 Stimulus Check (single), $2400 (married couple) and $500 per child, your 2018 or 2019 tax return will have to be filed UNLESS your only income is Social Security/Disability/SSI or at poverty level ($12,000 or less) in which you will get the $1200 check without filing a return. To get the check(s), your income as a single person will have to be less than $99,000.00, head of household, $146,500.00, or $198,000.00 as married to get the emergency payments (and those payments are reduced when your income exceeds 75k, single, 112k hofh, 150k married.)
* If you file 2014 to 2019, in most cases, the IRS will consider you "compliant" and not bother asking for the older years. If you owe money, a livable payment plan or settlement can be pursued.
* Efiling or paper filing? To get the quickest stimulus payment, you will want to EFILE 18 and 19 (and 17 while you are it), providing the IRS your bank information, even if you owe! Your relief payment will come much quicker with bank info. Otherwise, mailed checks have been rumored to take weeks if not months if the IRS doesn't have your bank info. Older years 14, 15, 16 still have to be mailed (no efiling available).
Naturally, self-employed people have a few more things to consider.
2. Back Taxes Owed? The IRS has generally prevented new liens or levies until 7/15/20 BUT on select cases where the statute of limitations is in play they might act. If you are in a payment plan and can't afford it any longer, you can default and likely have several months to come up with a new plan. In that "default" period, you can also examine with a tax professional to see if you qualify for a settlement or a more attractive remedy than a payment plan.
Does owing back taxes affect getting a 2020 Stimulus Check? We can't confirm at this moment, but owing back taxes shouldn't impede your ability to get a stimulus payment due to the Covid-19 virus.
