No stimulus due to Roth conversion
I wonder if anyone is in a similar situation?
I exceeded a stimulus income threshold slightly, so IRS shows that I am not entitled to the latest stimulus payment. Is there a gradual decrease of stimulus now, like it was for previous payments? Or once you are over the threshold, there is no stimulus at all?
Now, what is more important: at the very beginning of 202, way before Covid, etc. I did Roth conversion. That conversion was more than half of my 2020 AGI. I did not withdraw a penny, paid taxes for the conversion out of pocket, and having a real income of less than 40 K I am not qualified for the latest stimulus!!!
I find it highly unfair. Yet IRS doesn’t allow now any questions, and I am afraid nobody cares what AGI includes and if people really got this money. I just moved some from one account to another. And therefore I am penalized.
Do you know a way out of it maybe?
Thanks.
Anita
Permalink Submitted by Alan - IRA critic on Mon, 2021-03-29 23:42
All of the stimulus checks use tax return AGI of 75k for a single filer. However, the 3rd stimulus check is phased out at 80k, which is more quickly than the first two checks. Your conversion is included in your AGI, so this is what apparently resulted in loss of the 3rd check. The same thing might have happened to those those who sold stocks to protect their gains, so for many people otherwise good planning resulted in a loss of stimulus money, which was mostly bad luck.
However, if you had filed your 2020 return before the recent checks were issued, you will have another crack at this 1400 check when you eventually file your 2021 return. Therefore, if your 2021 return has AGI under 75,000 you will still get the stimulus, just one year later.
Permalink Submitted by ANITA DUSZYNSKA on Tue, 2021-03-30 15:29
Thank you Allan-iracritic for providing the information I was missing. And also giving me hope for getting the payment that I really believe that I deserve :). Have a great Easter time.