Your Stimulus Checks Aren’t Taxable
Its essential to understand that a stimulus payment is not taxable. The IRS has issued guidance stating that you do not need to include the amount in your gross income or pay taxes on the money.
Still, many people dont entirely grasp how stimulus payments affect their taxes.
The part that I think most do not necessarily understand is that the payment is technically an advance refundable tax credit, says Hawkins.
The stimulus payments were advance tax credits because the IRS gave you money in advance of filing your tax return. The recovery rebate credit is considered a refundable credit, meaning it can reduce the amount of taxes you owe or generate a refund to you.
One final important point: Typically, if you receive more money from the IRS than you’re entitled to, you must repay the excess amount. But the recovery rebate credit works differently. If you received a stimulus payment based on your previous tax information but no longer qualify, based on your current tax return, you don’t have to pay any stimulus money back.
Here’s Why Your Tax Refund Or Missing Stimulus Money Could Have Been Seized
Stimulus checks are technically considered a tax credit, no matter how you get them. Typically, the IRS can reduce a taxpayer’s refund to repay outstanding debts like past-due child support, unpaid student loans and certain other federal and state liabilities. The CARES Act stated that the first stimulus check could not be garnished for these purposes, except for overdue child support.
The went a step further and protected the second round of stimulus checks from all garnishment, including child support. However, it also limited that exception only to advance payments, and retroactively revised the CARES Act’s rules as well — meaning that your Recovery Rebate Credit that arrives on your tax refund for missing stimulus money is treated differently from the stimulus money that arrived for others in the mail, according to the Taxpayer Advocate Service, an independent organization within the IRS.
For the third check, because of the way it was passed, it’s open to garnishment from private debt collectors, but not child support payments.
Bottom line: If you’re eligible for a stimulus payment through a Recovery Rebate Credit, but you have certain outstanding debts, some or all of your credit could be withheld to pay those debts, the Taxpayer Advocate Service wrote in a blog post.
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You Had A Lifestyle Change In 2020 That Wasnt Reflected In Your 2019 Taxes
A lot can change in a year, and its very possible the IRS didnt have enough up-to-date information accurately reflecting your financial situation.
A few circumstances that could qualify you for more money: You had a baby in 2020, or adopted or fostered a child. Less common, say you share joint custody with a child but only rotate that responsibility every other year. You might be eligible for extra money by filing for a credit, and there are instances when your former spouse might pocket extra money as well.
Say I filed with Susie Q. in 2019 and I got the stimulus checks for that child, and then my divorced spouse filed with Susie Q. for 2020. She would get the Recovery Rebate Credit as well, says Mark Jaeger, director of tax development at TaxAct. Its a little bit of double dipping, but it is something that is allowed.
Additionally, maybe you got married or divorced. Perhaps you graduated college and started working, meaning youre no longer considered a dependent. And, as is likely the case for millions of Americans, perhaps you had a higher-paying job in 2019 but lost that position in 2020. Even individuals who were working in 2019 but retired in 2020 could be eligible for the credit.
These are just a sampling of circumstances that might mean youre eligible for a stimulus check or a higher amount.
Theres a lot of reasons why you may be due more that are all legitimate, Steber says. Its real money, and its a lot of money.
Missing A Stimulus Check Easy Way To Claim It
Many people who feel they should have received a stimulus check last year — or the second one this year — are still empty-handed.
While many of us have finally received both last year’s $1,200 check and the latest $600 check, many are still waiting for at least one of them.
You can try calling the IRS to resolve it, and waiting, and waiting, and waiting some more.
But the good news is there is now a very simple way to claim the stimulus you didn’t receive, when you file your taxes.
This year’s 1040 forms have a space –-Line 30 — to enter your “Recovery Rebate Credit,” what you did not receive for stimulus.
A recent article in The Washington Post provides step-by-step information on how to do it.
With programs like TurboTax, H& R Block, and TaxSlayer, the program’s questionnaire will ask you if you got your stimulus, or received just a partial check.
If you received nothing , the $1,200 or $600 you did not get should pop up as a tax refund.
It’s that simple to claim it.
Confusing terminology
But from the doesn’t that stink file, the IRS is once again making things more confusing then they need to be.
The agency calls it either a “Recovery Rebate” or “Economic Impact Payment,” which has confused a lot of people.
And with so many uncertainties these days, that stinks.
How about just calling the program a stimulus check?
That would be too easy.
Of course, a credit on your taxes is not as satisfying as seeing $1,200 pop up in your bank account.
Recommended Reading: Never Received 3rd Stimulus Check
Irs: Important Steps To Take For Missing Economic Impact Payments And Corrections
With the completion of special mailings of all Letters 6475 to recipients of the third-round of Economic Impact Payments, the Internal Revenue Service reminds people to accurately claim any remaining third-round stimulus payment on their 2021 income tax return as the 2021 Recovery Rebate Credit.
Through December 31, 2021, the IRS issued more than 175 million third-round payments totaling over $400 billion to individuals and families across the country. Most of the third-round payments were issued in the spring and early summer of 2021. The IRS continued to send plus-up payments through December if, after their 2020 tax return was processed last year, the taxpayer was eligible for additional amounts.
As required by law, the IRS is no longer issuing first-, second-, or third-round Economic Impact Payments. Instead, people who are missing a stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2020 or 2021 federal tax return.
Most eligible people already received the full amount of their credit in advance and don’t need to include any information about this payment when they file their 2021 tax return. This includes the additional payments called “Plus-Up” Payments the IRS issued to individuals who initially received a third-round Economic Impact Payment based on information on their 2019 tax return and were later eligible for a larger amount based on information on their 2020 tax return.
How To Make Sure You Receive Your Credits As Soon As Possible
The Recovery Rebate Credit worksheet requires that you know the specific amounts you were supposed to receive, according to the IRS. By doing the investigation and calculation work in advance, youll most likely end up getting your stimulus check and tax refund faster.
To get it correct, that cannot be overemphasized, Steber says. These Recovery Rebate Credits are real cash, and they sent out hundreds of millions in the two tranches. If you did in fact receive it and forget about it, it could add weeks to your tax return timeline.
Your tax refund will be passed more quickly and safely if you electronically file and provide a direct deposit, the IRS says.
Typically, the IRS is good at sending out refunds within a couple of weeks within electronically filing, Bronnenkant says.
Not included in 2020s Recovery Rebate Credit is a third stimulus payment worth $1,400 or more, distributed to Americans beginning in mid-March after President Joe Biden signed the $1.9 trillion American Rescue Plan. Taxpayers will most likely have to wait until 2021 to claim those missing relief payments, Jaeger says.
Also Check: How Much Was All The Stimulus Checks
How To Claim Your Stimulus Check
Theoretically, taxpayers were required to do nothing in order to claim their stimulus money. The IRS automatically calculated and sent payments to those who were eligible to receive them. If youre still waiting for your money, however, then you know that this system didnt work for everyone.
Again, we remind you to check the status of your payment with the IRS before taking any other action. If a payment was sent to you but never received, the IRS will need to track your payment down for you and correct any problems, such as erroneous bank account numbers, incorrect addresses or checks presumed lost in the mail.
If youre due a payment but none was sent to you, it could be because you werent required to file taxes in 2018 and 2019. In that case, youll need to file a return for 2020 even if you arent normally required to do so. You can get your money by claiming the RRC on that return. The IRS will issue your credit just as it would a tax refund, by direct depositing the money in your account or, if you prefer, by sending you a paper check.
Having a baby or adopting a child in 2020 could also change your payment eligibility status. Qualifying taxpayers received $500 per child in the first round of payments and $600 per child in the second round. If you had a child the IRS didnt yet know about, you may be eligible for more stimulus money under the RRC.
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.
Also Check: Irs Phone Number For Stimulus Check 2021
How Do I Claim My Stimulus Check Step By Step Guide
- 8:35 ET, Sep 8 2022
AN estimated 10million Americans had not received a stimulus check that they were entitled to, a March report found.
The Treasury Inspector General for Tax Administration conducted the report, revealing several factors as to why payments may be delayed.
Most people received their stimulus checks by check or direct deposit.
Others received them in the form of prepaid debit cards, and some mistook these cards as junk mail and regrettably threw them out.
The report by TIGTA said that manually verifying the stimulus claims and debit card policies has delayed the payments for as many as 10million people.
If you missed out on your payments, you can go to GetYourRefund.org to claim the funds.
How To Claim Your Rebate Credit
To get your money, youll need to claim the 2021 Recovery Rebate Credit on your 2021 return. Filing electronically can guide you through the form. Dont claim any missing first or second stimulus payments on your 2021 return rather, youll need to file a 2020 return or an amended return to get these payments.
The rebate credit does not count toward your taxable income. And be aware that youll need to fill out your tax return accurately and include the precise amount of stimulus payments the IRS has actually paid you to avoid a delay in your returns processing. If you enter the incorrect amount, it can hold up the processing of your return, Greene-Lewis cautions. The agency will not automatically calculate your 2021 rebate. It is on you, the taxpayer, to claim the Recovery Rebate Credit, Steber says.
Adam Shell is a freelance journalist whose career spans work as a financial market reporter at USA Today and Investors Business Daily and an associate editor and writer at Kiplingers Personal Finance magazine.
Also of Interest
Also Check: Irs Gov Stimulus Payment Status
There’s Still Time To Claim
There is some good news: There’s still time for people who missed out on their stimulus checks to claim them, the report noted.
“Individuals with little or no income, and therefore not required to pay taxes, have until November 15 to complete a simplified tax return to get their payments,” the GAO said.
There’s also still time for people to claim the expanded Child Tax Credit, which was provided last year to eligible families. That credit provided as much as $3,600 to families with children under 17, but parents who didn’t receive the payments last year have only until November 15 to claim them.
To claim a missing stimulus payment, people should go to the IRS website for “Economic Impact Payments,” the official name for the program, and follow the instructions there. You’ll have to file a simplified tax return to receive the money.
Parents who still have missing Child Tax Credits from 2021 can go to the GetCTC.org website to claim them.
However, people who are required to file taxes due to their income and who missed the April 15 tax filing deadline have until October 17 to claim the payments, the GAO said. October 17 is the deadline for filing 2021 tax returns if you requested an extension from the IRS.
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.
Recommended Reading: What Is The Third Stimulus Check
Americans Who Didnt Receive Any Stimulus Checks At All
Many Americans out there just havent received any of their promised stimulus checks. If thats you, you should jump at the opportunity to claim your credit.
A number of circumstances can cause these delays for you: Perhaps youve moved and the IRS doesnt have your new address on file. Maybe the IRS did have the correct address or bank account information, but it never hit your checking account or perhaps got lost in the mail. All of these would be instances when you should apply to reconcile your payment on your tax return.
As always, its good practice to go back through your records and find any documents from the IRS showing your designated stimulus amount, if you have them. Then, look back through your deposit statements around the time when both stimulus checks mightve been cashed or deposited .
The IRSGet My Payment tool will be helpful for tracking both of those checks statuses. That portal should also give you information showing the date of payment and the method , according to the IRS.
If all of your research validates these suspicions, its time to claim your Recovery Rebate Credit.
Who Isn’t Eligible For The Recovery Rebate Credit
If you received full stimulus payments, you aren’t eligible for any more cash. And you cant take the credit if someone else can claim you as a dependent.
Additionally, only U.S. citizens or resident aliens qualify for the recovery rebate credit. If you are a nonresident alien” someone who has not passed the green card test”you do not qualify for the credit.
You also are not eligible if you dont have a Social Security number. But if youre married and your spouse has an SSN, there are certain instances where you might still qualify for the credit even if youre not in the Social Security system.
Read Also: Are There Any More Stimulus Payments Coming
Finding The Amounts Of Your First Second And Third Stimulus Checks
To find the amount of stimulus payment youve received, you can:
- Refer to the IRS notices that were mailed to you. IRS Notice 1444shows how much you received from the first stimulus check. IRS Notice 1444-B shows how much you received from the second stimulus check. IRS Notice 1444-C shows how much you received from the third stimulus check.
- Check your bank statements. If you had your payments direct deposited, you can find the amount of your first, second, and third stimulus check using your bank statements. They should be labeled as IRS TREAS 310 and have a code of either TAXEIP1 , TAXEIP2 , or TAXEIP3 .
- Request an account transcript. You can request an account transcript sent electronically or by mail using Get Transcript. You can also call the IRS automated phone transcript service at 800-908-9946 or mail in Form 4506-T to have your transcript be sent by mail.
- Create an account on IRS.gov/account. You can view your stimulus check amounts under the Tax Records tab. If you filed jointly with your spouse, you will only see your half of the stimulus check amounts. Your spouse will need to sign into their own account to see the other half of the stimulus check amounts.
To create an account, you will need:
