The IRS will start processing tax returns on February 12th. If you make less than $72,000, you’re able to start the filing process right away, for free, using one of the IRS Free File partners. Like every American, freelancers have until April 15th to file their taxes or ask for an extension. But this year, you might not want to wait.
Get Your $600 Already!
If you haven’t received your second stimulus payment yet, and see the message “Payment #2 – Status Not Available” on the IRS Get My Payment tool, it means you won’t receive it until you file your 2020 taxes and claim the payment as a Rebate Credit. This mostly happened to folks who changed bank accounts since the first stimulus payment. Since the IRS didn’t allow anyone to update their bank information for the second round of stimulus payments, mostly due to time constraints, the money was returned to the IRS and the IRS didn’t have time to issue a check before the payment deadline. If this applies to you, you’ll still get your money but it will be in the form of a credit on your 2020 tax return.
Get your next stimulus payment faster
Providing the IRS with your latest bank account information will speed up any upcoming stimulus check you might be eligible for. If the IRS has a bank account on file for you, the stimulus payment will be processed via direct deposit (instead of a check or a prepaid card) and you’ll get your money in a matter of days, not weeks. (Note: if you’re using a Lili account, you’ll get it even faster, up to 2 days earlier!)
It appears that a new round of stimulus checks is about to be approved by the U.S. Congress and signed by President Biden, and it’s unclear whether you will be able to update your bank account information specifically for that payment, although it appears unlikely (see number 3). But by filing your 2020 tax return early, you’re updating your info in the IRS system, which they will hopefully use to send this new round.
Also worth noting, there are talks of reducing the income eligibility for this new round of stimulus payments, taking the maximum income per individual from $75,000 down to $50,000. So if you were hit economically by the COVID pandemic and made significantly less money in 2020 than in 2019, you might want to update that information as well.
There will be delays
The IRS is about to be asked to process millions more stimulus checks right in the middle of tax season – these folks are going to get swamped, which means there will most likely be delays in the processing of tax refunds. So if you’re expecting a refund this year, and hope to get it sooner rather than later, you should file as early as you can.
BONUS REASON: A chance to win $365 with Lili
Planning well for your taxes is one of the hardest things to do for freelancers. That’s why we’re building the tools we’re building, and writing the content we’re writing. And since you did it so successfully in one of the hardest years of our lifetime (we’re looking at you 2020!), we want to reward you with a year’s worth of Emergency Funds.
From February 21 to April 25, we’ll be giving away 20 prizes of $365, to help you kick-start your Emergency Bucket – $1 a day is a great place to start. There’s nothing for you to do except receive your tax refund into your Lili account via direct deposit. As soon as the refund hits your account, you’ll automatically be entered for the entire duration of the sweepstakes. So the sooner you file, the more chances you have to win. 😉