FlyingSloth

I thought a credit is something you get regardless, as long as you file? My income is virtually 0.. but I have savings. Would I not be eligible to get the $4,000 credit if I spend $8,000 on domestic travel, if I file my taxes for 2020 (even technically I don't have a require to file because my income is too low)? I thought credits are something that the taxpayer gets, as long as they're eligible, regardless of tax amount paid? I missed the tax "credit" from 2009 because I did not file taxes that year, because my income was also virtually nothing that year. But my understanding is that if I would have filed a tax return then I would have been eligible for the 2009 Great Recession credit. I think there was also one in 2001 that I missed too? Hopefully someone on these forums understands it and could clarify. Thanks!

LETTERBOY

I don't think anyone will really be able to answer these questions since this proposal hasn't become law yet. It may not become law at all.

Seph87

At a very high level, there are essentially two ways you can reduce your tax bill to the US Government: deductions and credits. Deductions are more common and reduce your taxable income, so your tax liability goes down by [deduction amount] * [your marginal tax rate]. Credits on the other hand reduce your tax bill directly. To make things more complicated, there are "refundable" and "non-refundable" tax credits. A refundable tax credit means you can claim it in excess of your tax liability, while a non-refundable tax credit means it is capped at your tax liability. For example, the $1200 stimulus checks were technically a refundable tax credit available immediately, so everyone got one, while something like the electric vehicle tax credit is non-refundable and is only available if you have a tax liability.

So basically, no one can answer your question without seeing the specific law, since it could go either way. If it's a refundable credit you will be able to claim it, but if it's a non-refundable credit and you have no income (and thus no tax liability) you won't be able to claim it. If it does end up being a non-refundable credit, you could have some options even with no income depending on where your savings are. If you have some assets with unrealized capital gains you could realize and claim the credit against that, for example, but it's impossible to say without seeing your full financial situation. I would talk to a CPA if this ends up materializing and you are interested in using it.

Sheila91

I doubt this will become a law. It would be nice but not likely to happen.

LETTERBOY

You never know, given how insane US politics have been for the last few years.

GUWonder

I wouldn’t be a fan of this idea becoming law. And I say that even as I spend enough on travel to perhaps get some personal benefit from such an idea becoming law.

Dublin_rfk

Yes, It is amazing how crazy politics have become. Start with a wild and unsubstantiated wish / rumor (trial balloon). Let it float around a little and then slam it for it being unworkable and out of touch with reality. The great Karnack predicts it won’t happen. Because one side of the swamp will declare it a gift to the rich and racist. Of course I can say that as I have already pumped 25K into the travel industry since 1 April and things have been a little slow.