While the news on coronavirus is grim, you might be happy to know that you won’t owe taxes on your stimulus check, also known as an Economic Impact Payment. Under the Cares Act, the stimulus checks are treated as a fully refundable tax credit for 2020, which means it isn’t included in gross income and thereby isn’t subject to taxes.
The stimulus checks are an advance on your 2020 tax credit, and you’ll need to report it when you file your 2020 taxes. However, “the stimulus check does not necessarily impact your 2020 tax refund or payment due,” says Dan Schindler, tax senior manager at Anders, an accounting and tax firm in St. Louis.
The confusion surrounding stimulus checks, Schindler says, comes from the money being alternately described as an advanced refund and a payment. Some people may interpret the stimulus checks as an advance payment of your typical refund; but, Schindler explains, “It is technically an advance payment of your refund directly and only related to this tax credit.”
The IRS determines your eligibility and stimulus check amount based on your 2018 or 2019 federal income tax return. But if you are now not eligible for a stimulus check based on your increased 2020 income, Schindler says, you don’t have to pay back the difference to the IRS.
In case you didn’t receive a stimulus check and you are owed one, you can still get the money when you file your taxes next year. Additionally, if your stimulus check was less than you were owed, you may receive the additional amounts owed—by way of an increased refund—when filing your 2020 tax return, notes Schindler.
If you filed your 2019 tax returns after the July 15 extended deadline, you will still get a stimulus check, however, it may not come until the end of the year or early next year.
The deadline to receive a stimulus check for those who don’t usually file tax returns is Oct. 15.
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August 06, 2020 at 04:30PM
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Do I Need To Pay Taxes on My Stimulus Check? - Barron's
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