THE THIRD $1,400 stimulus check and a potential upcoming tax refund could create the perfect opportunity to pay off debt, according to an expert.
This year’s deadline to file your tax return has been pushed back to May 17 meaning that many Americans, and still getting their tax refunds and considering what to do with the money.
CPA Scott Adair told WROC that the extra money will allow some people to look toward placing themselves in a more financially secure situation.
“Based on last year’s results somewhere between 70 to 75 percent of filers actually get a refund each and every year,” Adair said.
“The average refund is about $2,500 based on the IRS data from last year.”
“It is somewhat of a unique year from the standpoint of the number of stimulus checks that individuals have gotten and this tax refund,” he added.
“It gives a great opportunity if you have been able to save some money to start planning for the future.
"Setting up that emergency fund that we’ve talked about before, paying off any high interest credit card debt or unsecure debt that you may have or start saving for your children’s college fund."
Adair said that the priority should be to “get rid of that high interest debt first and foremost.”
“Second or third on the list would then be to get into that emergency savings fund, especially with the stimulus money that they’ve received, it would be a good time to start thinking about those things and especially with the challenges that we’ve gone through financially in the past year.”
CHILD TAX CREDIT
He also advised parents to remember that there could be more funds coming their way this summer from the Child Tax Credit.
“A lot of folks are not anticipating the fact that they’re going to get a check starting in July based on the IRS information that’s being published as part of that Child Tax Credit," he explained.
"That will go on through the rest of 2021 and could be a considerable amount of money depending upon the number of children that you have in your eligible income levels, so certainly something to watch for."
It comes as some Americans are still waiting for their $1,400 stimulus checks.
Under the American Rescue Plan, Americans who made up to $75,000 in 2020 with get the maximum $1,400 check.
Couples who file taxes jointly and made up to $150,000 will get $2,800.
The amount received though drops to zero for individuals who made up to $80,000 and couples who earned $160,000.
There's a $1,400 kicker for each dependent in the household.
However, many Americans have not received their cash yet for one of two potential reasons.
Those who have not yet filed their 2020 tax return may not have received their cash as the IRS may not have previously had your details on record.
The agency has been issuing stimulus checks directly to people's bank accounts as well as via check and pre-paid cards.
The IRS is encouraging people to submit their tax returns sooner rather than later to receive the cash sum.
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