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The federal government has delivered two stimulus checks to tens of millions of Americans as part of an effort to ease the economic pain triggered by the coronavirus pandemic, but many are wondering how payments could affect their 2020 taxes as the filing season progresses. approaches.
Taxes played an important role in how the government distributed the money: the first check, for $ 1,200, was based on your 2018 or 2019 tax return, while the second check, for up to $ 600 , was based on its 2019 statement.
But in some cases, Americans did not receive the stimulation check or did not receive the full amount they were entitled to, in cases such as job loss or the birth of a child.
Here’s everything you need to know about your taxes and stimulus checks:
Do I owe taxes on stimulus money?
No, because the IRS does not consider stimulus checks as revenue.
“The payment will not reduce the taxpayer ‘s refund nor increase the amount due when they file their 2020 or 2021 income tax return next year,” the agency said. “A payment will also not affect income for the purposes of determining eligibility for federal government assistance or benefit programs.”
I think I got the wrong amount of money. What should I do?
Eligibility for the first payment of $ 1,200 was based on your 2018 or 2019 income tax return, while the second $ 600 check was based on your 2019 income tax return.
If you received the wrong amount of money, you can still receive full payment: to do this, you need to file a 2020 income tax return and claim a recovery discount credit.
The IRS opened Free File, a free online tax preparation software, on Friday for taxpayers who earn less than $ 72,000 to prepare and file their income tax returns. Americans can also request their stimulus check using the tool.
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The IRS will begin accepting returns on February 12 – usually the agency opens the tax season in late January – because it needs more time to ensure that its systems can handle the credits that apply to the second stimulus payment.
“For 2021, qualified taxpayers who have not received the full amount can claim it as a Recovery Discount Credit when they file their 2020 tax return,” said the IRS. “Use the free IRS file to register and claim this important benefit.”
I did not receive my stimulus check. What should I do?
The IRS had until January 15 to distribute the second $ 600 stimulus payment. If you do not receive the cash payment, you can claim a recovery refund credit on your 2020 income tax return.
Some Americans are not entitled to cash payment: College students and dependents over 17 will not receive the money, nor will immigrants who do not have a Social Security number. Some wage earners who received a check during the first round of stimulus payments will also not qualify for the second round.
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You can use the IRS Get My Payment tool to check the status of your stimulus check.
My income has changed since I filed my taxes last year. Am I eligible for stimulus money?
Single people earning less than $ 75,000 and couples earning less than $ 150,000 together were eligible to receive both full stimulus payments. But millions of Americans lost their jobs or saw their income drop this year as a result of the pandemic – meaning that many individuals who initially did not receive the money based on their 2018 or 2019 tax returns can now qualify.
If you think the IRS owes stimulus money, you can use a recovery discount spreadsheet to calculate how much you should receive and claim that amount on Line 30 in your 2020 tax return. The IRS will include your stimulus payments as part of of the refund check.
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When can I receive my tax refund?
The IRS urged Americans to file their taxes electronically this year, as the agency handles a portfolio of nearly 7 million unprocessed paper returns from last year.
“If the filing season was opened without the correct schedule, then there could be a delay in issuing taxpayer refunds,” the IRS said in a press release.
The agency said it expects nine out of ten taxpayers to receive their refund within 21 days after the electronic deposit.