The Impact of Stimulus Payments on Your Taxes
The Economic Impact Payments that were sent to almost 160 million people was one thing about last year that many of us appreciated.
But if you received a stimulus payment, you might be wondering if you're expected to pay it back or how it may affect your taxes. Here are answers to some of the questions that you may have to help put your mind at ease.
Do I owe tax on the money I received? That's an easy one; the answer is no. The stimulus payments were designed to help the economy and not affect your taxes. If you received a stimulus payment, it won't reduce your 2020 refund or increase your tax due.
Why didn't I get a payment? If your income for 2019 or 2018 was over $75,000 ($150,000 if you filed jointly, $112,500 if you were head of household), then your payment was reduced by $5 for every excess $100 you earned. And if you didn't file a tax return for either year, you may not have received a payment. You can track your stimulus payments at the IRS's online tool – Get My Payment.
What if I should have received a stimulus payment but didn't? First of all, if you were supposed to file a 2019 tax return but didn't, be sure to file right away. If your income was too low to file, at IRS.gov you can click on the tab marked "Non-filers" and fill in your necessary information. If the IRS determines you are eligible for a payment, they will send it to you.
What if my 2020 income decreased? If you weren't eligible for a stimulus payment based on your 2018 and 2019 tax returns, but your income dropped significantly in 2020, you may be eligible to claim the Recovery Rebate Credit when you file your 2020 tax return.
My 2020 income increased – will the government want the money back? No. If you received a stimulus payment based on a lower income in 2019, that payment is yours to keep even if your income increased above the threshold in 2020.