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While Americans are having a hard time agreeing on much these days, most everyone was pretty pleased with the multiple rounds of stimulus checks sent out during the COVID-19 pandemic.
While many of us wanted — or needed — more to make ends meet during a time of such great economic upheaval, most were not upset to receive a check for $1,200 in the spring and another recent payment of $600. The incoming Biden administration is now stumping for another quick infusion of $1,400 in Americans' pockets.
But it's now tax time as well, and you might be wondering whether those cash injections last year are going to now show up as part of your income, which you will then owe taxes on.
Let's get the most important information out of the way first. According to the IRS, the stimulus checks are "not income and taxpayers will not owe tax on it." This means that it will not decrease any refund or increase what you may owe. The IRS also notes that receiving a stimulus check will not affect your eligibility for any federal assistance programs, such as food stamps. It is likely that any additional stimulus checks passed by Congress during the Biden administration will be treated the same way.
So rest easy, because that money is essentially a free tax refund on money that you've already contributed as an American taxpayer. Spend it, save it, invest it; do whatever you want with it.
While you will not owe any taxes on your stimulus checks, the IRS does use your tax return in determining whether you are eligible to receive a check.
For the first round of checks in the spring of 2020, the agency looked at 2018 and 2019 year tax returns to determine whether you made too much to receive the $1,200 checks. For this most recent round, of which all checks were required to be issued by Jan. 15, the agency looked at 2019 tax returns for determining eligibility.
Millions of people who may have been eligible didn't receive stimulus checks from either round of relief. This could have been for reasons like:
If you think that you are owed stimulus money, you still have a chance to claim it. However, you will need to file a 2020 tax return to claim your Recovery Rebate Credit. You must do this even if you did not make enough money to have to file. A tax professional can help you determine whether you are eligible.