I feel like every time I look at the news, there's more money raining down on us.

{I am so glad I haven't contributed to 2020 IRAs yet, or filed our tax return.  We would have had to change/amend everything.}

It seems likely this is the first year (ever) that we will go on extension.  Our taxes are very simple.  But...  As much as I had come to abhor the ridiculousness and tradition of 12/31 retroactive tax changes (which made my life mostly impossible when I worked in tax).  Making tax changes March after the year is over, is just absurd.  😠 I hope it's a 'once in a lifetime' pandemic thing and doesn't become the new way of things. 

Mostly irritated because, we really really really could have used that extra $11,000 for college.  But I put it in my 401K to avoid a tax cliff (50% tax rate).  Nothing we can do about it.  That is something I can not change.  

{This commentary is in regards to retroactively making first $10K-ish of unemployment tax-free in 2020}.

I can revise this when new stimulus is finalized, but it looks like this is probably how things will shake out.

First $10,000-ish of unemployment will be tax free for 2020:  

Tax savings 2020:  +$1,700

Child Tax Credit changes:

Tax savings 2021: +$1,750?**

At the lease, $1,000 tax savings for DL (increased child tax credit)

**Oh boy, this one is going to get complicated.  If we don't file our 2020 tax return, we will get advanced child tax credits for MM that we won't have to pay back.  At this point, maybe we just file our tax return in September (final due date).  I will have to go through the math and figure this one out.  

Thankfully, they also made this credit more refundable.  I was already targeting -$0- Federal taxes in 2021.  This could mean that we literally pay -$0- in Federal taxes but the government pays us (negative tax rate).  We pulled this off during some of our early one-income/maternity no-income years.  Our tax rate hasn't been -0- or negative since our kids were babies.

Unemployment extension:

???

I did see the latest unemployment extension being thrown around is through Labor day, or when MH's job would most likely come back anyway.

I am not sure if MH will keep looking for work or will have the patience for unemployment red tape.  We will have to run through tax and college financial aid calculators to figure out if we are getting anything net net net (with extra income).  This will be better math once we have a college decision in hand.  Unemployment has already replaced two years of his income, for reference.  We may just be happy with that and done with this red tape mess.  

Stimulus:

+$5,600

This is the amount we will probably receive.  I've never seen any AGI cutoff discussed that would affect us. Our AGI was same 2019 and 2020 (based on current tax law) and so it doesn't matter which year they pull to base this stimulus off of.  Potential new tax law just lowers our AGI even further for 2020 (which wouldn't change anything).

I actually was holding off tax filing because technically MM(17) was not eligible for the last two stimulus amounts.  It sounds like he will be this round.  I wasn't going to volunteer that he has turned 17 last year, in case he wasn't eligible for this round either.  <---This is the reason we haven't filed our tax return yet.

Phew! Thank goodness we held off.  Now, I am going to wait for unemployment taxes to sort out.  I don't want to have to amend a tax return.

I do hope they can figure this out before April 15th.  (I mean, between finalizing the bill, and getting everything programmed with tax software and IRS.  It takes time to implement tax law changes).  I don't want to go on extension, and it would be nice to know how much we could put into Traditional IRAs before the April 15th deadline.  🙄  (Depends on our AGI).

Edited to add:  This was written before I read we could get some child tax credit for MM and not pay it back, if we do go on extension.  I guess extension it is.

Total unexpected monies:  $9,050

I guess that breaks down into $5,600 expected soon and $4,700 at the end of 2021.  Minus some advanced tax credits we may have to pay back in 2022. I can't adjust my withholding to pay negative tax (or even $0 tax), so I don't have any other way to advance these monies into 2021.  But I guess it works out nicely that the government wants to advance these tax credits, July through December of this year.

If MM goes the public school route (and lives in the dorms) then that is 1000% what I am going to do with this $9,050 basically falling from the sky.   We needed to roughly come up with $10K per year.  We are going to probably pay most of the dorm costs with his college fund and it sounds like the bajillion dollars in groceries we spend (for that kid) will equate to dorm food costs.  That leaves about $5,000 that I think is mostly hyper inflated expenses (that we would be more frugal about), things MM(17) covers already (like the cost of his car), and things we expect him to pay for (books, personal expenses).  <---- He also has very generous grandparents willing to help him fill up this $5,000 bucket.  

This is really rough, but is where our heads are at with public colleges:  We will get -0- financial aid**.  I never expected any financial aid for public in-state colleges, but it's official that the financial aid reward is: $0.  (I do not seriously consider student loans as a financial aid reward).

**We are technically eligible for some automatic State grants, which sound like they may be $2k per year (for public college).  Those will take forever to sort out, so I don't know.  We are putting this in the 'not counting our eggs, but will take more money falling from the sky' category.  I expect more details in October, if he chooses a public school.

No one in our family has ever lived in a dorm (and did not go away to college, for the most part).  Though MH and I both chose not to spend our 'college money' on college, and felt we needed that more for post college housing in the SF Bay Area.  We have kept that same mindset and never really expected to use this money for college.  It's extra complicated because MM's college money is gifted from grandparents.  Too many strings and weirdness, which is also some of why I just ignore it.  So... we discussed recently and agreed that pretty much his college fund would be spent on dorm costs.  If MM is going to live in the dorms, we won't be saving this chunk of change for him to use after college.  It will be up to him.  (We won't pay it forward, if he chooses a significantly more expensive college route).

I had a lightbulb moment.  I have to back up first though.  I've gotten a few well meaning comments (over the years, in this blog) that we need to be prepared to pay for college before college starts.  ??? (& to clarify, I mean like having to pay a semester ahead of make a down payment.  Though honestly, all I see is installment payment options, anyway. We are more "pre-pay as much as we can" personalities.  I think we'd pre-pay the semester rather than deal with the hassle of more frequent payments.  But I am also hyper aware that is not normal whatsoever).  Look, I entirely put myself through college.  I know how college works.  We also have never borrowed for anything (but our home).  You don't do that just flying by the seat of your pants.  I think people are confused.  We have never tied up a penny of our money 'specifically for college.'  This doesn't mean we have no money, no plan.   MM(17) can go to school pretty much anywhere he wants to go to school, and we intend to pay cash.

Hence my lightbulb moment.  As I think through how much these windfalls mean we pretty much will be spending $0 or our own income/savings this year.  It's... 1 year down and only 3 to go!?  It's kind of blowing my mind.

I just keep thinking, "6 more years..." and so it's kind of nice to realize that it may just be "5 more years..."  College is our last big mountain before financial independence.