I am seeing a lot of people online worrying about the tax ramifications of the individual tax payer stimulus checks that should be going out in the next few weeks, and I want to clear some things up. We all have enough to worry about right now, and I want to ease your minds regarding these checks. The incorrect information I am seeing most often is that these checks will have to be paid back when you file your 2021 taxes. That is not correct.
Here are some quick facts:
The government will base the amount of your stimulus check on your 2019 taxes, if you have already filed. If you have not yet filed, it will be based on your 2018 taxes.
For single filers, if you made less than $99,000 you will receive a check. Anyone who made less than $75,000 will receive a $1,200 check.
Single filers who made more than $75,000 but less than $99,000 will receive a lesser amount based on a sliding scale.
Double the amounts if you are filing jointly. $1,200 per person for a total of $2,400 if you made less than $150,000 jointly, less than that on a sliding scale until you phase out at $198,000 in joint income.
Households with qualifying children will receive $500 per child.
One of the most important things to understand is that these checks are a pre-payment by the government on a new, refundable tax credit that will be taken on your 2021 taxes. This credit will be in addition to any tax credits you already receive, so your normal refund will not be affected. Think of this as just a bookkeeping exercise for the government to account for these checks.
If you end up making more money in 2020 than you did in 2018/2019, you will not be expected to pay back any of the stimulus check. There is no clawback provision in the law so it will be treated as a rounding error in your favor on your taxes.
To be clear, if you would normally expect a $1,500 refund, you will still get a $1,500 refund. The amount of the stimulus check will not come out of your normal refund. It is an additional tax credit, and you are receiving the amount of the credit now, rather than when you file your 2021 taxes.
If you owe back taxes it will not affect your stimulus check - you will still receive it. However, the law does provide an exception for child support. If you are in arrears for child support your check may be withheld.
Also, I want to remind you that the IRS will not be calling you about the stimulus checks. If you get a phone call, it is likely a scam of some sort. Do not provide any bank or personal information over the phone.
This article from Forbes provides some good information about the stimulus check.
https://www.forbes.com/sites/jimwang/2020/03/27/how-to-maximize-your-coronavirus-stimulus-check/#3af4621710b9