Lynnley Browning (Financial Planning), College Students May Score 3 COVID Stimulus Checks. Here's How.:
The pandemic stimulus package that’s muscling towards the finish line contains a powerful financial boost that can jumpstart wealth-building for young adults.
Under the $1.9 trillion COVID relief bill passed by the House on Feb. 27, checks of up to $1,400 would flow to middle- and modest-income taxpayers. And unlike previous rounds of stimulus checks, the bill would also provide money for dependents aged 17 to 24.
That means millions of college students and other young adults are on track to get a nice chunk of change.
It gets even better: Some college students and other young adults may also be able to claim up to an additional $1,800 from the two prior stimulus programs. Among the eligible: those who graduated last year and are now in the workforce (or not) and filing their own tax returns, or those who turned 24 last year, can retroactively claim the two prior stimulus payments ($1,200 and $600) when they file their taxes this year. ...
The two prior government-relief payments ($600 in December 2020 and $1,200 in March 2020) excluded young adults age 17 to 24 whose parents claimed them as dependents on their own returns. While taxpayers with dependents under age 17 got an additional payment of $500 and $600, respectively, on their behalf, older dependents afforded no benefit for their parents or guardians.
Technically, stimulus checks for dependents go to their parents or guardians. As with the prior two government relief checks, the full $1,400 payment would go to individuals making up to $75,000 a year (up to $150,000 for married couples). ...
The smart move for young recipients is not to splash out on a new iPhone or other fancy purchase, says Robert Pagliarini, the president of Pacific Wealth Advisors, an RIA in Irvine, California. Instead, they should channel their $1,400 into tax-free investments. His recommendation: a Roth IRA, “the best investment vehicle you can find,” Pagliarini says.