What a year 2020 was! New Year’s celebrations were barely over when the coronavirus turned things topsy-turvy. But one bright spot for 159 million people was the $1,200 Economic Impact Payment.
We’re now on our third round of stimulus payment disbursements, and with the state and federal tax deadline right around the corner (Don’t forget, the IRS extended the deadline!), you’re probably wondering how it’ll affect your taxes. Didn’t get a payment? Not sure what the “catch” is? We’re here to help answer those questions and more.
Do I owe tax on the money I received? That’s an easy one: No. The stimulus payment was designed to impact the economy, not your taxes, so it won’t reduce your 2020 refund or increase your tax due.
I didn’t get a payment—why? 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 gotten a payment. But don’t despair, you still may be entitled to a payment.
Really? What can I do now? If you were supposed to file a 2019 tax return and didn’t, 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 basic information. If the IRS determines you are eligible for a payment, they will send it to you.
What if my income has gone down? If your 2019 income was too high for you to receive a payment, but your income for 2020 was much lower, you’re in luck. You can claim your stimulus payment on your 2020 income tax return and increase the refund you receive (or reduce any tax due).
My 2020 income is higher than in 2019—will the government want the money back? No. If you received a stimulus payment based on lower income in 2019, that payment is yours to keep even if your income increased above the threshold in 2020.
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The information in this article is for general educational purposes only and not intended to provide advice or recommendations. Consult your tax advisor for details specific to your situation.