Stimmy stimmy ko ko bop

The main goal of Congress' "stimulus" programs of the past year has been to get free money into people's hands fast. They've managed to do that, but the mechanics of the system have been odd, to say the least.

The politicians decided to have the IRS make the payouts, and to run them vaguely through the tax system. I say "vaguely," because although the payments are treated as tax credits, they're like no other tax credits anyone has ever seen.

Here's a real-world example of what I mean. Say you had a good year financially in 2018, a bad year financially in 2019, and a good year financially, despite the pandemic, in 2020. The first stimulus payments are on the books as credits against tax in 2020. And you can't take them on your tax return if your 2020 income is over a certain amount. But last year, when the IRS was cutting fast checks and issuing the goofball debit cards (strong graft odor noted), they obviously didn't have your 2020 tax return yet. And so they went with the most recent tax return they had on you, either 2018 or 2019.

If you filed your 2019 tax return electonically, the IRS probably already had it on its records by stimulus time, and so voila! You probably got your stimmy based on your 2019 return (your bad year). But if you filed on paper, the IRS still had your return sitting in a warehouse somewhere, unprocessed because of Covid. And so you didn't get stimulated becase they went with 2018, your good year. Now you're filing your tax return, and your 2020 income is too high to claim the credit. So you're out of luck, all because you filed on paper for 2019, instead of electronically.

What about someone who's exactly the same as you, but the IRS processed their 2019 return promptly and sent them their check? Do they have to pay it back now, because their income was too high in 2020?  No. They get to keep it. They were "entitled" to it, because the IRS got around to updating its data on them and sending them the free money. You weren't "entitled" to it, because your 2019 return was sitting in the IRS warehouse.

This is a bad way to run a tax system.

But Congress doesn't care. They're drunk on stimulus now. They waited until a couple of months into 2021 to decide that you don't have to pay tax on unemployment benefits you got in 2020. By the time they changed the law, a lot of people had already filed and paid tax on the unemployment. What a mess. But like I say, Congress doesn't care. It's the IRS's problem now.

An IRS that they refuse to fund adequately, by the way.

One of these days, the many games that the politicians play with the tax system and the IRS are going to cause the whole system to crash. If you thought January 6 was bad, wait until you see what happens then.