How The Stimulus Check May Affect Your Taxes

To date, 147 million second stimulus checks have been scheduled by the federal government.  If you don’t get yours, you can claim the money when you file your tax return.  That doesn’t necessarily mean you will get more money back from Uncle Sam.

If you don’t receive your second stimulus check in your bank account or the mail, the good news is you can claim the money when you file your tax return this spring.

But beware: That doesn’t necessarily mean you will automatically get the full $600 or other funds you feel are owed through the direct payments issued by the government.

The reason: The recovery rebate credit by which you can claim that money will be factored into your overall tax return, including liabilities.

So if you receive a credit for the $600 stimulus check, but owe $500, you will receive a payment of just $100.

The IRS is aiming to get all the stimulus checks out the door by Jan. 15. If you don’t receive the money soon after, it’s best to claim it on the tax return you file this spring, said Garrett Watson, senior policy analyst at the Tax Foundation.

It’s not just people who didn’t receive $600 second checks who stand to get more money. It’s also those who received no $1,200 check for which they were eligible.

Now, those individuals and families will be “topped up” for missing funds. Notably, those who received overpayments generally do not have to pay those sums back.

How to claim your recovery rebate credit

This year, the traditional Form 1040 and Form 1040-SR for seniors will let filers claim the recovery rebate on line 30. That will include a separate worksheet to help calculate the amount you are due.

The notices the government previously mailed regarding eligibility for the first or second payment can help you determine the amounts for which you can qualify. However, the section also applies to those who were overlooked and didn’t receive those notices.

Many people will probably opt to use either an automated tax preparer or accountant to help them through the process.

Because the recovery rebate credit will be based on 2020 adjusted gross income, it’s worth checking to see if your payment eligibility changes from the past stimulus payments, which were based on either 2018 or 2019 returns, particularly if your income went down last year.

Despite the recovery rebate, tax refunds overall may not necessarily go up dramatically this year.

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