With tax season in full swing and the next stimulus payment hitting bank accounts, you may want to know if the payments received in 2020 have an impact on your filings. The stimulus payments are not considered income by the tax agency and not tax-deductible. Because the payments are not considered income, they can be treated like a refundable tax credit. To put it simply, you can treat your stimulus check as an advance on money you would have received anyway as part of your tax refund in 2021. Keep in mind, this may not be the case when filings in 2022.
Did you qualify for a payment in 2020 but didn’t receive one or both? If for some reason, you didn’t get any stimulus payment last year, you can get it this year when you file your 2020 tax return by claiming the Recovery Rebate Credit.
Those who opted in for Direct Deposit will receive the current round of stimulus payments first (deposits began on March 12th. Checks will begin to be issued on March 17th. You can check the status of your payment by going to https://www.irs.gov/coronavirus/get-my-payment.
To qualify for the third round, individual taxpayers must be earning less than $75,000 and joint filers earning under $160,000.
The Treasury Department will use your 2019 federal return or your 2020 return if you have filed one already. This can make things a bit complex for a couple of reasons. For one, the IRS will be including makeup stimulus money from the first two checks with your tax refund this year. It also means the IRS will likely use whichever tax return it has on file most recently. If your income was too high for a payment based on your adjusted gross income for 2019 but you think you may be eligible based on your circumstances from last year, you should file your tax return as soon as you can.
