After a challenging 2020, we are cautiously hoping 2021 will bring a steady return to physical and economic health. Vaccines are ramping up, and stimulus checks going out to many of us, even if this round is smaller than many of us hoped for.
If you didn’t receive a payment, you may be wondering, why? And if you did, you may be wondering, what’s the catch? We’re here to help put your mind at ease, so let’s tackle some frequently asked questions.
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 tax year refund or increase your tax due.
I didn’t get a payment – why?
If you exceed the income requirements, you may still receive a reduced stimulus payment, but the $600 payment phases out completely at $87,000 Adjusted Gross Income for individuals and $174,000 for couples filing jointly. Children age 17 and above, as well as dependent adults (e.g. college students) are not eligible for the $600 dependent payout. Nor are children 17 and older claimed as dependents.
Really? What can I do now?
If you are eligible but haven’t received your payment yet – you might need to wait until you file your 2020 tax return, when you can claim the stimulus as a Recovery Rebate Credit. This will either be as a refund credit or a reduction in taxes. Reasons you might not have received it already include, among others, non-filing of tax in 2019, a backlog at the IRS, or because you recently moved your residence. See this review by Kiplinger for more details.
What if my income has gone down?
If your 2019 income was too high to get a payment last time around, but your income this year is much lower, you’re in luck. You can claim your stimulus payment on your 2020 income tax return, and it 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.
When it’s time to file your taxes, get expert advice.
Doing your own taxes, especially for simpler filing, is certainly an option. You can access a number of free services at the IRS website. But in many cases, using an expert, paid service may save you more overall and avoid costly errors and penalties.
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This article was developed in partnership with TurboTax.