How Do My 2020 Stimulus Checks Tie Into My Taxes?
Normally at this time, many Central New Yorkers would be in the process of starting to prepare their taxes. Tax season has been delayed and the IRS will not begin processing returns until Feb. 12th.
We've received two stimulus checks this past tax season, and many have questions regarding what exactly they mean for our returns. Do we need to pay tax on that money we received? If those stimulus payments were never received, what has to be done to claim that money?
According to USA Today, you will not have to pay taxes on the stimulus checks because they aren't considered income by the IRS. They consulted Kathy Pickering, chief tax officer for H&R Block, who said that instead they are prepaid tax credits for your 2020 tax return, authorized by two relief bills passed last year that were aimed at stabilizing the U.S. economy amid the coronavirus pandemic.
If you got the full amount for the first and second payments, you don't need to do anything,
If you fall into the category of people who did not get the correct amount for the stimulus payments, be sure to check your 2020 gross income and your family.
The IRS based your two stimulus checks on either your 2019 or 2018 tax returns – but your income or family size could have changed in 2020.
"The stimulus checks directed a combined $1,100 to each dependent child 16 and under – but if you had a baby in 2020, the IRS wouldn’t have known that given the tax agency won’t start accepting 2020 tax returns until Feb. 12. In other words, you wouldn’t have received any stimulus money for your child, even though your family qualifies for the additional $1,100."
You may not have received your check because of a glitch or incorrect bank account information with the IRS. The good news is, you can fix that when you file your 2020 tax return. To figure out if you are owed money, turn to the IRS’ recovery rebate worksheet, which is available in its 2020 instructions for filing your tax return (Form 1040.)
If you are owed more money from the two rounds of stimulus payments, the IRS will provide the additional payments with your refund check. It will not impact your refund by increasing your adjusted gross income or putting you in a higher tax bracket, since the payments are not considered income.
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