That $1,400 Stimulus Check Is Great. But Do You Owe Taxes On It?
Some might naturally wonder: Will my stimulus payment be a part of my annual taxable income?
The Internal Revenue Service has confirmed that millions of Americans have already received their coronavirus stimulus checks under the American Rescue Plan—and you can rest assured that more is on the way.
Roughly a hundred million more stimulus checks—totaling more than $420 billion—are headed to financially struggling Americans through direct deposit and traditional mail over the course of the next several weeks.
As these recipients of the stimulus checks start to spend their money, some might naturally wonder: Will my stimulus payment be a part of my annual taxable income?
According to the IRS, thankfully, you won’t be on the hook for any future taxes.
“No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 or 2021 tax return next year,” the agency says on its website.
“A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.”
Also, be aware that if you earned more than the third check stimulus income limit for your 2020 tax year, and you already used your 2019 tax year to claim the stimulus payment, the IRS will not mandate that you pay that back.
Keep in mind that the Economic Impact Payment is technically a tax credit. You’re getting what amounts to a refundable tax credit now in the form of another round of stimulus payment, rather than waiting to get the money from the credit in 2022 when you actually file your 2021 tax return. So, you’re just able to get your hands on the funds now.
If you’re still patiently waiting to receive your third stimulus check, take note that fewer Americans will receive checks this time around, so make sure to confirm if you even qualify. Individuals who earn as much as $75,000 in adjusted gross income (AGI), or couples making $150,000—in addition to their children or adult dependents—qualify for the full $1,400 per individual.
Single parents with at least one dependent who earn $112,500 or less also get the full amount. Families in which some members have different citizenship and immigration classifications are eligible for a payment, if at least one person has a Social Security number.
The payments, however, phase out much more quickly than in previous rounds—an individual with an income of $80,000, or a couple with $160,000, will receive nothing.
If you are indeed eligible to receive a stimulus check based on your AGI, then you should also make sure how much you and your family can expect. According to the details of the American Rescue Plan, the maximum payout all depends on how many dependents you have.
Let’s say you qualify for the maximum amount based on your AGI, and that you’re a family of two adult joint filers with one dependent. In this scenario, you would be eligible to receive a total of $4,200. With two dependents, the check would rise to $5,600, with three dependents $7,000, and so on.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.