Report Stimulus Checks on My Tax Return
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Do I Need to Report Stimulus Checks on My Tax Return?

You may have a ton of questions regarding how to record your COVID stimulus checks on your tax return. Here, we answer them all!

If you’re reading this you probably have questions regarding your stimulus checks and your 2020 tax return. One popular question is, “Do I need to report stimulus checks on my 2020 tax return?” Well here I will answer this question and more!

Some other questions you might have about the COVID related stimulus checks include:

  • Is my stimulus check taxable?
  • Do I need to pay back the stimulus check?
  • If I didn’t get my check can I get a credit for it on my 2020 return?
  • What if I had a child in 2020 but didn’t get an extra check?
  • If I can’t be claimed as a dependent in 2020 can I get a credit?

Don’t worry – this article will answer it all.

Some Background

How much do you know about the stimulus checks? Although it’s free money you used to buy clothes, food or investments, you’re probably asking yourself, “how much more do I need to know?” Even though it may seem straightforward, the stimulus checks are more complicated than you think. Here’s everything you need to know.

What is the Recovery Rebate Credit?

Congress created the Recovery Rebate Credit in March of 2020 to working class families. Since the credit was based on 2020’s tax return Congress needed a way to distribute funds faster. Hence, the Economic Impact Payments were born.

What exactly are the Stimulus Checks?

The stimulus checks were advances on the Recovery Rebate Credit. The technical term for these checks were Economic Impact Payments (EIP). Initially, the first round of EIP gave adults $1,200 and an additional $500 per qualifying child.

More recently, the second round of EIP gave $600 to each adult and qualifying child. Also note that there may be more to come.

Who received the Stimulus Checks?

Eligible individuals who received the stimulus checks included taxpayers who were:

  • Citizens or U.S. resident aliens
  • Taxpayers not claimed as a dependent; and
  • Taxpayer’s with a valid Social Security number.

Additionally, taxpayers who had higher income received reduced checks:

  • Married couples earning more than $150,000
  • Head of household earning more than $112,500; and
  • Individuals earning more than $75,000

So, do I need to report my stimulus checks on my tax return?

Short answer is no – you don’t need to report your stimulus check on your 2020 tax return. If you received the full amount for yourself, your spouse and dependents no further action is required. However, if you received a reduced amount you may be eligible for an additional credit.

Other questions you may have about the 2020 stimulus checks.

Is the Stimulus Check taxable?

No, it’s not taxable and don’t report it as income on your 2020 tax return. Since this is a refundable credit you would treat it as any other federal income tax refund.

Will I have to pay back the Stimulus Check?

No, according to the IRS you will not have to pay it back. For example, if your income is higher in 2020 you won’t need to re-compute your credit.

Was the Stimulus an advance on my 2020 tax refund?

No, it was not an advance on your normal tax refund. This money was above and beyond what your normally receive. For example, if you had the same amount of income and withholdings you should expect your normal refund.

What if I Didn’t Receive the Full Stimulus Checks?

If you didn’t receive your full stimulus check you may claim the difference on your 2020 tax return. To do so, you can calculate the credit on your 2020 1040 tax return.

What if my income was lower in 2020?

If your 2019 income was high then your first and second stimulus checks were probably limited. For example, if your check was less than $1,200 and $600 ($2,400 and $1,200 for married couples).

However, if you were laid off, furloughed or fired in 2020 you may be able recoup the difference. If your 2020 income is lower and you received a reduced stimulus you can claim the difference on your return.

Remember, if your 2020 income was higher you will not have to repay.

What if I had a newborn in 2020?

Many parents who had a newborn in 2020 did not receive an extra payment for their new dependent. Did you adopt a child in 2020? You’re also eligible for an additional credit. You have until the due date of the return, including extension, to obtain their valid social security number.

What if I’m no longer a dependent?

If you were a dependent on your parents tax return then you may not have received a stimulus check. College students all across the country were disappointed to see their bank account missing the $1,200 and $600 deposit.

However, if you’ve graduated or you’re no longer a dependent in 2020 then you can claim your stimulus check.

How do I claim the credit?

If you believe you’re eligible for the Recovery Rebate Credit you can claim it on your 2020 Form 1040. The 2020 Instructions include a worksheet you or your tax accountant can use to figure the additional credit.

The credit will increase your refund or decrease the amount of tax due on your 2020 tax return. If you have questions your tax accountant can guide you through the process of claiming an additional credit.

Do I Need to Report Stimulus Checks on My Tax Return – Summary

There are a lot of questions out there regarding the taxability of the COVID stimulus checks. One of the most common ones is “Do I need to report stimulus checks on my tax return?” Again, the answer is no!

Hopefully the questions that were answered in this article are helpful to you. For more articles like this check out the trending and tax policy sections of our site.

Jeremias Ramos is a CPA working at a nationally recognized full-service accounting, tax, and consulting firm with offices conveniently located throughout the Northeast. Jeremias specializes in tax and business consulting with focus areas in real estate, professional service providers, medical practitioners, and eCommerce businesses.

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