The Impact of Stimulus Payments on Your Taxes
The Economic Impact Payments that nearly 160 million people received via direct deposit or by mail was one bright spot from last year.
If you received a stimulus payment, you might be wondering, what’s the catch? We are here to help and put your mind at ease, so let’s tackle your questions, one by one.
Do I owe tax on the money I received? That’s an easy one: No. The stimulus payments were 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 received a payment. You can track your stimulus payments at the IRS’s online tool – Get My Payment.
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 necessary 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 this year is much lower, you are in luck. You can claim your stimulus payment on your 2020 income tax return, and it will 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 a 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, TurboTax is here to help!
From simple to complicated taxes, TurboTax® has you covered. And when you need help, real experts are standing by — and can even do your taxes for you, start to finish with TurboTax Live®. Getting your biggest possible tax refund has never been easier. And as an AHFCU member, you can save up to $15 on TurboTax. Click here to get started today!
