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The federal government has issued 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 the payments could affect your 2020 taxes in l ‘The deposition season is approaching.
Taxes played a major role in how the government distributed the money: the first check, worth up to $ 1,200, was based on your 2018 or 2019 tax return, while the second check, worth up to $ 600, was based on your 2019 return.
But in some cases, Americans have not received the stimulus check or have not received the full amount they were entitled to, in cases like job loss or the birth of a child.
Here’s everything you need to know about your taxes and stimulus checks:
Do I have to tax the stimulus money?
No, because the IRS does not consider stimulus checks as income.
“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 said. “A payment will also not affect income for the purposes of determining eligibility for federal government assistance or benefit programs.”
I think I received the wrong amount of money. What should I do?
Eligibility for the first payment of $ 1,200 was based on your 2018 or 2019 tax return, while the second check for $ 600 was based on your 2019 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 tax return and claim a recovery refund credit.
On Friday, the IRS opened Free File, a free online tax preparation software, for taxpayers who earn less than $ 72,000 to prepare and file their tax returns. Americans can also claim their stimulus check using the tool.
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The IRS will begin accepting returns on February 12 – typically, the agency opens tax season at the end of January – because it needs more time to make sure its systems can handle credits that apply to second stimulus payments.
“For 2021, eligible taxpayers who have not received the full amount can claim it as a recovery refund credit when they file their 2020 tax return,” the IRS said. “Use IRS Free File to file and claim this important benefit.”
I haven’t received my stimulus check. What should I do?
The IRS had until Jan. 15 to distribute the second stimulus payment of $ 600. If you don’t receive the cash payment, you can claim a recovery refund credit on your 2020 tax return.
Some Americans are not eligible to receive the cash payment: Students and dependents over the age of 17 will not receive the money, nor will immigrants who do not have a Social Security number. Some higher earners who received a check during the first round of stimulus payments will also not be eligible for the second round.
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You can use the IRS’s 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 the stimulus money?
Singles earning less than $ 75,000 and couples earning less than $ 150,000 combined could receive both full stimulus payments. But millions of Americans have lost their jobs or have seen their incomes decline this year due to the pandemic – meaning that many people who did not initially receive the money based on their tax returns. 2018 or 2019 may now be eligible.
If you believe the IRS owes you stimulus money, you can use a recovery refund worksheet to calculate how much you should receive and claim that amount on line 30 of your 2020 tax return. The IRS will include your stimulus payments as part of your refund check.
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When can I expect to receive my tax refund?
The IRS has urged Americans to file their taxes electronically this year, as the agency is dealing with a backlog of nearly 7 million unprocessed paper returns from last year.
“If the filing season was open without the right programming in place, then there could be a delay in issuing refunds to taxpayers,” the IRS said in a press release.
The agency said it expects nine in 10 taxpayers to receive their refunds within 21 days of filing electronically.
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