Stimulus Check Update: Heres What To Know If Youre Claiming A Stimulus Check On Your Taxes
by Christy Bieber | Updated July 25, 2021 â First published on April 13, 2021
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Claiming your stimulus check on your tax return? Hereâs what you need to know.
In March, President Joe Biden signed the American Rescue Plan Act into law and authorized the distribution of a third stimulus check. The IRS has distributed more than 156 million of these payments and is continuing to steadily deposit money into peopleâs bank accounts or mail out checks.
If you havenât yet received your third check, you can use the IRSâs Get My Payment tool to determine when your money will arrive.
If you didnât receive either the first or second check, though, the IRS will no longer send the payment to you automatically. You are going to have to claim it by filing your 2020 taxes if you didnât receive your money. Hereâs what you should know about this process.
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How To Claim Stimulus Checks On Your 2020 Tax Return
The deadline to file your taxes for 2020 has been extended to May 15, so there is still time to map out your tax strategy. One area of ongoing confusion is how to claim stimulus checks. Everyone received two or more government stimulus checks in 2020 to help with expenses during the pandemic, but do you need to claim those checks as taxable income?
The short answer is, no! Money paid out in the form of stimulus checks isnt considered taxable income. Receiving a stimulus check has no impact on your ability to qualify for federal assistance either. Even if you didnt receive a stimulus check, you still may qualify for a stimulus payment in the form of a tax credit.
If you are still confused about how to account for claim stimulus checks on your taxes, here are some additional details to help you.
Economic Impact Payments Eligibility
If you have not received your third stimulus check and are eligible, you can claim the Recovery Rebate Credit when you file your 2021 tax return. Check out the third stimulus payment eligibility below.
Generally, someone is eligible for the full amount of the third Economic Impact Payment if they:
- are a U.S. citizen or U.S. resident alien , and
- are not a dependent of another taxpayer, and
- their adjusted gross income is not more than:
- $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
- $112,500 if filing as head of household or
- $75,000 for eligible individuals using any other filing status
Payments will be phased out or reduced above those AGI amounts. This means people will not receive a payment if their AGI is at least:
- $160,000 if married and filing a joint return or if filing as a qualifying widow or widower
- $120,000 if filing as head of household
- $80,000 for eligible individuals using any other filing status
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The Irs Recommends People Submit Their Returns Electronically
If you are filing a 2020 tax return soon, the IRS recommends doing so electronically. According to the IRS, its free file service will remain available through Oct. 15 for taxpayers who still need to file their 2020 tax returns. This service offers free online tax preparation and filing options to certain taxpayers.
Taxpayers who requested the six-month filing extension should complete their tax returns and file on or before the Oct. 15 deadline, the agency says. If you wait, the IRS Free File will no longer be available, as only the current years returns can be filed with the service. The IRS also advises that you choose direct deposit if you are meant to be owed a refund, like the 2020 economic payments.
I Get Ssi Should I Spend The Stimulus Money Within A Year What Can I Spend It On
Spend down your CARES Act EIP money before 12 months have passed since receiving the payment. You are not limited in what you can spend the money on. You can spend down on whatever you wish, including on gifts and charitable contributions. If you don’t spend it within 12 months, the Social Security Administration will count the money as a resource.
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What About Adult Dependents
Adult dependentsa diverse group that includes college students, the elderly and disabled individualswere overlooked in a big way for the first two stimulus payments. Unfortunately, theres not much that will be done about that it seems: You cannot claim missing stimulus checks for adult dependents on your 2020 tax return. That said, the silver lining is that the recently passed American Rescue Plan does include a provision that full payments be issued for adult dependents and minor dependents alike.
What If My Spouse Or Ex
If you did not get all or some portion of your Economic Impact Payments you can file a 2020 tax return and claim these amounts on line 30 of the form. The IRS is referring to this as the recovery rebate and will allow you to claim any of the EIPs that you did not get in advance. You may get a denial letter from the IRS, but that is the opportunity to reply and explain your situation to the IRS.
Vermonters with a low income can contact us for help at the Vermont Low-Income Taxpayer Clinic by filling out our form or calling 1-800-889-2047.
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If I File My Taxes Now Will It Speed Up Or Slow Down My Third Stimulus Payment
That depends. Since the IRS is now sending out the third stimulus payment, one potential way to receive it soon is to , if you haven’t already. There is no guarantee, however, that the IRS will receive your banking information in time to use it for your payment.
The IRS uses your tax returns to calculate, and in some cases process, your stimulus payment.
Your Stimulus Check Is Formally Called A Recovery Rebate Credit
The stimulus checks handed out to combat the financial effects of the pandemic are technically an advance tax credit called the Recovery Rebate Credit.
A tax credit reduces your tax bill on a dollar-for-dollar basis. It’s like having store credit at your favorite clothing shop when you apply it to your total bill, it reduces what you owe. Often it can result in a refund.
Because of the severity of the national crisis, the government gave eligible Americans their tax credit early the amount was based on their latest tax return filed or their federal benefits profile. People who don’t normally file taxes were asked to submit their personal information to the IRS online by November 21 to claim their payment. If they didn’t, they will need to file a tax return for 2020, even if they don’t owe taxes.
Most stimulus payments were initially based on 2018 or 2019 income, since those were the most recent tax returns filed. In some cases, that means people who lost their job, had their pay reduced, or even had a baby since then weren’t given their full credit based on financial need in 2020.
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When Will I Get The Recovery Rebate Credit
You will most likely get the Recovery Rebate Credit as part of your tax refunds. If you electronically file your tax return, you will likely receive your refund within 3 weeks. If you mail your return, it can take at least 8 weeks to receive your refund.
Claiming the Recovery Rebate Credit will not delay your tax refund. However, if you dont claim the correct amount of the Recovery Rebate Credit, your refund may be delayed while the IRS corrects the error on your return. The IRS will send you a notice of any changes made to your return.
You can check on the status of your refund using the IRS Check My Refund Status tool.
How The Stimulus Payments Could Affect Your 2020 Tax Refund
If you’ve correctly claimed the Recovery Rebate Credit, the IRS will add the money you’re due to your 2020 tax refund. So if your refund was set to be $1,000, and you’re owed another $1,800 from missing stimulus checks, you’ll get $2,800 total.
This also works in reverse. If you’re on the hook to pay taxes, the IRS will reduce your bill by the amount of your stimulus checks. Say you owe the government $5,000 but are due $1,800 in EIPs. Your bill will be $3,200.
The Recovery Rebate Credit may also impact your state taxes, according to The New York Times.
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Why Your Stimulus Check May Be Missing
Although the stimulus payments have provided some much-needed relief, the delivery process has not been without its flaws. In some cases, payments have been deposited into old, inactive bank accounts or checks mailed to the wrong address other individuals have received a payment for themselves, but not for their dependents and folks who dont typically file taxes may have slipped through the cracks entirelyparticularly those who missed the deadline to use the IRS non-filers tool to claim payment. Bottom line: There are a whole host of reasons why your Economic Impact Payment might have missed the mark, or just gone missing. Whatever the case may be, theres a fairly straightforward solution, and it comes down to filing your 2020 taxes.
Who Is Eligible For A Stimulus Check
The vast majority of Michigan residents are eligible to receive a stimulus check from the federal government this year. Even if you have no income, you are still eligible, but need to take action to receive your stimulus payment. This includes individuals with low or no earnings who normally don’t file taxes. Every American adult earning less than $75,000 is eligible for a stimulus check from the federal government this year. While this site is geared toward Michigan residents, the information is applicable nationwide.If you still have questions about your stimulus check after reviewing this website, call the IRS at or, United Way at .
After you sign up, make sure to add your account information on the IRS website. If you dont want to sign up for a bank account, you can also link to your prepaid debit card instead.You can also receive your funds through the Cash App, by providing the IRS with the routing and account numbers connected to your Cash App. You can download the Cash App or locate your Cash App account information here.
What if I havent filed taxes?
What if I dont qualify – where else can I get help?
If you dont qualify for the stimulus payment, we recommend reaching out to Michigan 2-1-1. They can connect you to resources in your community.
Will my payment be reduced or offset if I owe tax, have a payment agreement with the IRS, owe other Federal or State debt, or owe other debt collectors?
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People Who Didnt Get The Full Relief Payments Can Get The Remainder On Their 2020 Tax Returnsif They Qualify
The Internal Revenue Service expects to make a large chunk of tax-refund payments at the beginning of March.
WASHINGTONThe Internal Revenue Service is basically done sending out stimulus checks, after finishing a first round in the spring and summer and a second round in December and January. But there are still billions of dollars that some households can claimthrough their 2020 tax returns.
Here are some key questions and answers:
The Recovery Rebate Credit
The novel coronavirus shuttered the doors of businesses across the globe. This led to mass layoffs at companies both big and small. The United States congress needed a way to help keep working class families stay afloat during these lean economic times. To do this, they passed the Recovery Rebate Credit in March of 2020. This rebate credit was issued via two payments in the second, and fourth quarter of 2020. These payments are known as Economic Impact Payments .
The amount of your Economic Impact Payment was based on your 2019 tax return. This means that your reported 2019 income determined the amount you would receive in your stimulus checks. The first round of EIPs were issued in the amount of $1,200 to every US adult. An additional $500 was issued for each dependent, up to a maximum of $2,400 for married couples. You should have received these payments in April or May of 2020.
The second round of EIPs consisted of $600 for every US adult, and an additional $600 for every dependent, up to a maximum payment of $1,200 for married couples. You should have received these funds in December, 2020 or January, 2021.
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How Are Taxes Stimulus Checks And Dependents Tied Together
For the second check, you could receive up to a $600 payment for each dependent under age 17 whom you claim on your taxes. The definition was narrower than for dependents who’d be eligible for certain credits under tax law, including children 17 and older, dependents of any age with disabilities and older adult relatives.
Under the new law, the $1,400 payments go out to a more widely defined group of dependents.
I Never Got My Second Stimulus Check So What Should I Do Whats A Recovery Rebate Credit
The December stimulus bill set a Jan. 15 cutoff for the IRS and US Treasury to send the second stimulus payment to bank accounts and through the mail as a paper check or EIP card. Unless the IRS mailed your check right at the deadline or your payment is caught up in a direct deposit holdup with tax preparers, youll need to claim money from the $600 stimulus check when you file your federal tax returns this year as a Recovery Rebate Credit on 2020 Form 1040 or Form 1040-SR.
You can also claim money the IRS owes you from the first round of stimulus checks, authorized last spring millions are owed a catch-up payment for child dependents.
To help work out whether youre missing a payment, and for how much, the IRS provides a Recovery Rebate Credit Worksheet. Youll need the IRS calculated amount from the letter the agency will send you, called Notice 1444 for the first payment and Notice 1444-B for the second payment.
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Can My Stimulus Check Payment Be Seized
First, the good news. If you owe money to the federal government in back taxes or defaulted student loan debt, your stimulus check should be safe from whats known as a federal offset or federal garnishment. In other words, youre typically able to keep your full stimulus payment in this case.
However, the federal government can take all or part of your stimulus check if youre overdue on child support payments.
You also might lose that money if a court has ordered you to make certain types of payments, such as if a judge has demanded that you turn over money to a debt collector. The Indiana and Texas supreme courts have halted seizures by debt collectors, and some state officials have advised that debt collectors are prohibited from seizing stimulus checks. In April, attorneys general from 25 states called on the U.S. Treasury Department to ban debt collectors from seizing stimulus checks.
Furthermore, your bank or credit union might seize your stimulus check, without a court order, if you owe money to them. For instance, your bank or credit union might take your stimulus money if you have an overdue auto loan, a delinquent personal loan or an overdrawn account.
What can you do if your stimulus check has been seized? Options include:
Checking Status Of Your Refund
Taxpayers can check the status of their refund at the IRS site “Where’s My Refund?”
People will need to know their Social Security number or their Individual Taxpayer Identification Number, their filing status and their exact refund amount.
The IRS says people can start checking the status of their refund within 24 hours after an electronically filed return is received by the agency, or four weeks after a taxpayer mails a paper return.
The tool will provide information about three phases of processing: Alerting the taxpayer when their return is received, when their refund is approved and when the refund is sent.
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Claiming A Missing Stimulus Check : Issued April 2020
Here’s how to claim your first missing stimulus check:
- Verify you qualified based on your 2018 or 2019 income.
- Make sure you didn’t receive what you should have.
- Use the IRS worksheet to figure out how much you should’ve received. You could also use an online calculator or your electronic filing software.
- Claim that amount as the Recovery Rebate Credit.
- Wait for your money to arrive as a tax refund. If you owe the IRS more than it owes you in missing stimulus funds, your tax debt will be reduced by that amount. In other words, if you’re due $600 in stimulus but you owe the IRS $1,000, you’d just send the IRS $400.
Unfortunately, you can no longer use the IRS’s Get My Payment tool to see how much you were entitled to under the first two stimulus rounds. At this point, that tool only works for the third stimulus payment.