How will your stimulus check affect your tax return? Common questions and answers.
Going into the 2020, tax season one of the most common questions I receive is how the stimulus checks will impact my clients’ tax returns. Here is a basic answer to FAQs, but if you have questions about your specific situation, please don’t hesitate to give us a call.
What is the Recovery Rebate Credit?
The recovery rebate credit is the total amount of stimulus payment you should have received in 2020 based on your marital status, number of children, and income levels. The credit will be issued to you in the form of a refund when you file your tax return. This credit is reduced by the actual payments issued to you by the government in the form of stimulus checks.
Do I owe taxes on my stimulus checks?
The stimulus checks are not considered income and are not subject to income tax by any Federal, State, or local governments.
How can I see if I am still owed money?
Yes, but first you will need to file your taxes. You can either ask your tax advisor, or if you want to see for yourself, look on line 30 of your 2020 tax return. This amount is the additional credit owed to you by the government.
What if I received a greater stimulus payment than I should have?
Most people will simply be allowed to pocket the additional money from the IRS without having to worry about paying it back or paying taxes. It is rare treat to have the IRS give you more money than they should have that you get to keep, so enjoy! There are rare exceptions in which these rules do not apply, such in the years of someone’s death, so if you have additional questions make sure to ask your tax advisor.
How do I know how much I received?
- The IRS sent letters that show your stimulus payments; these forms are called Notice 1444 and Notice 1444B.
- You can check your bank records for deposits from the IRS.
- The IRS now has online accounts where you can see a variety of information, including the Economic Injury Payments:https://sa.www4.irs.gov/eauth/pub/login.jsp?Data=VGFyZ2V0TG9BPUY%253D&TYPE=33554433&REALMOID=06-00029c6a-0543-17b0-89b8-163b0acf40c7&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=UOkC7yx4eMTO24FGxPfBRb5q3Mj3Xh3pyXfBEjYyHJ97nGCXu16wx5MzFHjfZmlG&TARGET=-SM-https%3a%2f%2fsa%2ewww4%2eirs%2egov%2fola%2f.
If you have more questions about the stimulus checks or any other tax topic, please give our office a call and ask to speak with one of our tax team members.