I Feel Guilty...I need to vent...

[seb65]

We are in a similar situation with an AGI of $163500. I feel especially bad since this was the first stimulus our college age son would have qualified to receive. And of course he was priced out with the income change. We planned to pass along the money to him to help pay for his summer classes.

We were hoping to use it for college, as well.

The silver lining is that while it would have been helpful, it isn't as if we needed it for survival. We are lucky to have been able to pay bills through this all.

 

[sandam1]

We don't have any IRA's. I have a 401K and my husband has a 457 (? I think that's what the "government 401K" is called?). That was also part of the kick in the teeth...part of our taxable income was $1000 that he took out of his retirement account at the beginning of last year.

Have you checked to see if you are eligible (based on your income) to start one?

I don't know if you had someone prepare your taxes or not, but if it were me, I would have someone who knew the ins and outs of the tax system take a look at my taxes and see what is possible. I know that our local tax preparer does this for free and they have been VERY helpful.

 

[sarah4770]

Unless I am missing something, I’m not sure what difference an ira would make. If you are covered by a 401 at work, at that income, you don’t get any deductions for a traditional ira.

 

[cookiecar]

We were hoping to use it for college, as well.

The silver lining is that while it would have been helpful, it isn't as if we needed it for survival. We are lucky to have been able to pay bills through this all.

Very true. We are very fortunate to not have been significantly impacted by Covid aside from canceled plans for the past year and transitioning to work from home.

 

[dclpluto]

It sucks you did the right thing helped out probably hundreds of covid patients didn’t get covid yourself and you file your taxes one week too early.

 

[mistysue]

I'm sorry- missing out on the stimulus by half the amount of it sucks!
I made another post about this same idea because it fascinates me that they didn't consider they phased it out quicker than the amount of money people would get. I lived in near poverty for most of my adult life, and we're finally doing well just in time for them to start taxing the money from me and handing it to everyone else. Plus were got TONS of deductions the "tax cuts" act did away with. (And college I literally couldn't buy food, there was no saving for college when my oldest was young)

Of course it's good to not be struggling, but it doesn't take away from the unfairness.

 

[TwoMisfits]

I'm sorry- missing out on the stimulus by half the amount of it sucks!
I made another post about this same idea because it fascinates me that they didn't consider they phased it out quicker than the amount of money people would get. I lived in near poverty for most of my adult life, and we're finally doing well just in time for them to start taxing the money from me and handing it to everyone else. Plus were got TONS of deductions the "tax cuts" act did away with. (And college I literally couldn't buy food, there was no saving for college when my oldest was young)

Of course it's good to not be struggling, but it doesn't take away from the unfairness.

Yeah, the phase out ultimately ended up being ridiculously fast. It became a cliff that if you had 4 people in your fam, you lost money if you earned $160K vs $150K thanks to the effects of the taxes on the $10K you earned vs the lack of taxes on the $5.6K you'd have gotten tax free.

There's a certain WV senator to thank for the uber-steep cliff. Usually, you don't set up policies that negatively effect someone earning money. But, in this case, more earned money at certain levels actually screwed the taxpayer.

PS - My brother was one of those guys - he got 2 bonuses in 2020 b/c his 2019 one was delayed (so this year, in 2021, he'll again be under the cliff). He qualified in 2019, but would have been off that cliff just slightly in 2020 - I had him hold off filing, and he did get his $5600.

 

[mistysue]

Yeah, the phase out ultimately ended up being ridiculously fast. It became a cliff that if you had 4 people in your fam, you lost money if you earned $160K vs $150K thanks to the effects of the taxes on the $10K you earned vs the lack of taxes on the $5.6K you'd have gotten tax free.

There's a certain WV senator to thank for the uber-steep cliff. Usually, you don't set up policies that negatively effect someone earning money. But, in this case, more earned money at certain levels actually screwed the taxpayer.

PS - My brother was one of those guys - he got 2 bonuses in 2020 b/c his 2019 one was delayed (so this year, in 2021, he'll again be under the cliff). He qualified in 2019, but would have been off that cliff just slightly in 2020 - I had him hold off filing, and he did get his $5600.

So what I thought was interesting- that phase out for a single person is over $5,000 - if you had 2 single parents with 3 kids side by side, the one making $74,400 is AHEAD of the one making $80,000! With a couple it's possible to completely bridge the gap with 6 kids so there are far fewer that would feel it completely.

I started playing with numbers thinking about how two of my kids have disabilities so in our state we can "buy" a medicare plan for them that covers only the disability. The price for the plan doubles just short of $160,000 - so a couple thousand dollars can mean losing $7,000 + paying out an extra $1,500, plus phases down child credits, etc. There's a window where if it worked *just right* a family could be seriously penalized for not taking a couple weeks off work. Plus with all the deductions that have faded out or are basically impossible to take, it's a cruel gap.
We have close to $15,000/year in work travel that can't deduct anymore, a home office that counts for nothing, spend $15-20,000 on medical which is barely a deduction, etc.

I'm definitely annoyed at people in DC breaking the system so badly.

 

[RamblingMad]

Pro tip. Wait as long as possible to file your taxes and try to minimize your refund as much as possible.

If it makes you feel better, I don’t qualify for the stimulus either.

 

[justafigment27]

No reason to feel guilty for being upset, OP. It seems like a bit of a slap in the face when the only reason your income exceeded the stimulus threshold in 2020 was because you were working harder & longer than ever before because you’re a medical first responder in the middle of a pandemic. You were out there in the trenches, risking exposure and leaving your spouse to take care of the home front and the kids - they were stressed and worried about you in addition to all the normal pandemic stress. Life was probably very, very hard for all four of you. Meanwhile, the family next door has an AGI of $150,000 with one stay at home parent and one executive level parent who worked safely from home during the entire pandemic (saving money on gas and other work related expenses) and they qualified for the entire stimulus. It’s maddening.

IMO, they should have just given stimulus based on the lower of the two incomes between 2019-2020 instead of making the public try to figure out which situation would benefit them more financially.

 

[DisneySoldier]

Unless I am missing something, I’m not sure what difference an ira would make. If you are covered by a 401 at work, at that income, you don’t get any deductions for a traditional ira.

Thanks for pointing this out! I initially thought you were incorrect, and believed the traditional IRA income limits were based only on filing status and not 401K eligibility. However, I researched it, and you're spot on! Interestingly, the income limits for a traditional IRA are different for married filing jointly if both spouses are eligible for a 401K than if only one spouse is eligible for a 401K. Even if they wanted to, sounds like the OP wouldn't be able to do a deductible traditional IRA contribution to lower their AGI for 2020.

 

[StitchesGr8Fan]

We haven’t qualified for any of the stimulus packages. And while I know how blessed we are, it still sucks that we pay a crapload of taxes, will continue to pay more taxes, and don’t get the stimulus. And we would have put it back in the economy. I still think this wasn’t a stimulus payment, it was a necessities payment. It was to help people be able to afford to live, not put back in the economy. Which is fine, but call it something else.

 

[MomToOne]

Thanks for pointing this out! I initially thought you were incorrect, and believed the traditional IRA income limits were based only on filing status and not 401K eligibility. However, I researched it, and you're spot on! Interestingly, the income limits for a traditional IRA are different for married filing jointly if both spouses are eligible for a 401K than if only one spouse is eligible for a 401K. Even if they wanted to, sounds like the OP wouldn't be able to do a deductible traditional IRA contribution to lower their AGI for 2020.

No deductible IRA, but maxing out a regular (non Roth) 401K can drop your AGI significantly at incomes levels like the OPs. Many people don't max those out. Maxing out an HSA if you are eligible can also drop it. I do both of these every year just to get my AGI as low as possible - it's amazing what doing that gets you, such as the stimulus.

But OP - I thought of something last night, can't believe someone hasn't thought of this sooner. If your 2021 income will be back to "more normal" levels (sounds like it might) then you should eventually get the stimulus based on that lower income, but not until you file your 2021 taxes. The stimulus was technically an advance refund of your 2021 taxes - they just based it on the last AGI they had on record to get the stuff out the door fast. There will be a way when filing your 2021 taxes to claim it. (For anyone who has higher income in 2021 and wouldn't qualify based on that but got it - don't worry. There are no stipulations in the law for paying stimulus payments that you shouldn't have gotten back.)

And if you feel like your income might still be high, this is where maxing out that 401K and any HSA can "fix" that and get you the stimulus on your 2021 taxes.....

So you can still plan that trip - just not until 2022

 

[Orion Nebula]

It's not wrong to feel that way, just because people make more doesn't mean they are sitting on piles of gold. Someone making 200k probably structured their life around it. So the pandemic could've put them in a bind also. It doesn't matter if their house payment is more than yours if they can't make it.

I don't make over the limits and I still think it's a bit ridiculous to ignore higher earners due to assuming the pandemic didn't cause them any hardships.

 

[HeatherC]

No reason to feel guilty for being upset, OP. It seems like a bit of a slap in the face when the only reason your income exceeded the stimulus threshold in 2020 was because you were working harder & longer than ever before because you’re a medical first responder in the middle of a pandemic. You were out there in the trenches, risking exposure and leaving your spouse to take care of the home front and the kids - they were stressed and worried about you in addition to all the normal pandemic stress. Life was probably very, very hard for all four of you. Meanwhile, the family next door has an AGI of $150,000 with one stay at home parent and one executive level parent who worked safely from home during the entire pandemic (saving money on gas and other work related expenses) and they qualified for the entire stimulus. It’s maddening.

IMO, they should have just given stimulus based on the lower of the two incomes between 2019-2020 instead of making the public try to figure out which situation would benefit them more financially.

The whole thing is maddening. They should have simply given every American X amount and kept it a simple bill. It would have cost way less and helped every American. I feel so bad for so many struggling and then having something like this happen.

 

[Disneybuckeye]

Vent away as it is frustrating. We are well over limit, and have a great life, so I am trying hard not to complain that we do receive anything. We also patronize local and tip well to help. I just have to look at the bright side that we are very fortunate (and worked really hard) to get where we are.

I have 3 children in their late 20's and early 30's and only one qualified for any money. One of them was just over like you are. I told him he was still better off making that money, having more in his 401K, and a higher base for future raises than receiving $1400.00 from the government. He still was not happy, but he understands.

Sometimes it is nice to come here and vent your frustrations. Hopefully it makes you feel a little better to let it out.

 

[mistysue]

The whole thing is maddening. They should have simply given every American X amount and kept it a simple bill. It would have cost way less and helped every American. I feel so bad for so many struggling and then having something like this happen.

This would have solved so many issues. Last year I remember people being so upset that they had a good 2019, then had next to no income in 2020, needed the help and had nothing. (especially small business owners who didn't get the loans)

 

[dcfromva]

Everyone is talking about their stimulus money and I KNOW that I should NOT feel bad, but here's my situation...

I work as a paramedic. My normal salary is roughly $62K per year and that means I work 84 hours every 2 weeks (36/48). I've been doing this for 23 years now. My husband retired after 30 years as a police officer and he takes home only his pension which amounts to about $65K annually so we are not struggling financially. Based on our 2019 income, we qualified for the full stimulus payment of $5600....$1400 for us and $1400 for each of our children (ages 17 and 15).

Well, as you all know, 2020 was a tough year for us health care workers. Due to the pandemic, I was deployed on several assignments that lasted weeks at a time. My company is a private company but we are contracted through FEMA and DHS to provide support throughout the country. Due to the unprecedented circumstances, I worked substantial overtime at a much higher pay rate than normal. My income this year ended up being $97K! We saved a lot of it, but we also knew that a lot of businesses were struggling so we patronized local restaurants and made sure that we shopped local and tipped VERY generously. We also donated much more frequently than we normally would because we felt blessed to be in our situation. It was not enough to offset the standardized deduction so we did not get any sort of break on our income taxes. I submitted our 2020 income taxes and our modest refund was in our account 5 days later.

Then, the president signed the stimulus package and I found out that our family would not qualify for any payments because our total income was $2900 over the limit. Yup....we made $162,926. Our "normal" annual income is just a tad over $120,000 so to find out that we missed the stimulus cut off by just $2900 hurt. AND, if I would have just waited ONE more week to file our taxes, it would have been based off of 2019's income and we would have qualified....

UGH! Like I said...I hate complaining about this, because I should not be saying "Oh whoa is me...I have too much money"....I just don't feel like I have the money because it was not my typical year, the deployments are done and I am back to my regular earnings again. Everyone keeps talking about all of the great things they are going to do (vacations, etc) or buy with their stimulus money and it just makes me sick to think how close I came to receiving that $5600...if I had only waited ONE more week...

...thanks for letting me vent...

Now, hold on a minute.... Won't the stimulus be based on the 2021 tax year?

The previous stimulus bills were for the 2020 tax year--they based the payments on the information they had (2019 taxes) And, the beautiful thing was if it turned out your 2020 tax year income exceeded the stimulus limits--you didn't have to pay it back...

I will have to research this more...but, if this latest one is similarly structured you might be okay....You might qualify to get this latest stimulus when you file 2021 taxes (if you haven't exceeded the limit for 2021 tax year).

 

[dcfromva]

Okay, here is a link for you:

https://www.cnbc.com/2021/03/12/lose-income-2021-qualify-third-stimulus-payment-retroactively.html
So, maybe you will be able to stay under the limit. Are your contributions to your 401k pre tax? Are you maxing out your 401k contributions?

Also, keep your charitable cash contribution receipts. I think it was the 2nd stimulus bill that they allow $600.00 deduction for 2021 tax year even if you don't itemize (I think that might be 300 per person MFJ). That was line 10 on 2020 tax forms--deducted before line 11 to get AGI.
I found a link regarding the charitable deduction for 2021. (The 2021 charitable donation will not reduce your AGI)

here's the link:
https://www.kiplinger.com/taxes/tax...s-an-additional-reward-for-the-gift-of-giving

 

[Sjm9911]

Now, hold on a minute.... Won't the stimulus be based on the 2021 tax year?

The previous stimulus bills were for the 2020 tax year--they based the payments on the information they had (2019 taxes) And, the beautiful thing was if it turned out your 2020 tax year income exceeded the stimulus limits--you didn't have to pay it back...

I will have to research this more...but, if this latest one is similarly structured you might be okay....You might qualify to get this latest stimulus when you file 2021 taxes (if you haven't exceeded the limit for 2021 tax year).

Thats an excellent point. It will not help me , but it will ballance some out. ( it might for this year, but i will still get nothing for last year because they forgot to pay me for a dependent, and when i file taxes for 2020 , i will not qualify due to my retro check).