Stimulus checks and your 2020 taxes: Important things you don’t want to overlook

Heads up — your taxes play a huge role in the amount of money you got in your first and second stimulus checks, and the same could be true for a future third stimulus check. Even if you’re not normally required to file taxes, they make a difference by changing the way you need to claim any missing stimulus money. 

The IRS is also using this year’s tax return (for taxes on your 2020 income) to pay anyone who didn’t get a second stimulus check before the Jan. 15 deadline, through a Recovery Rebate Credit that the agency built directly into the tax return process. Plus it’s a good time to sign up for direct deposit, if you haven’t yet.

With layers of complication to navigate and Tax Season 2020 just around the corner, you have time to collect the paperwork you’ll need to claim a payment. We’re here to explain how tax returns and your stimulus checks go together, how your dependents figure in, whether the payment counts as taxable income and everything else you need to know. By the way, here’s we know about a third stimulus check for potentially $1,400 or $2,000 per qualified adult.

What happens if I haven’t got my second stimulus check? What’s a Recovery Rebate Credit?

The December stimulus bill set a Jan. 15 cutoff for the IRS and US Treasury to send the second stimulus payment to bank accounts and through the mail as a paper check or EIP card. Unless the IRS mailed your check right at the deadline or your payment is caught up in a direct-deposit holdup with tax preparers, you’ll need to claim money from the $600 stimulus check when you file your federal tax returns this year as a Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR. You can also claim money the IRS owes you from the first round of stimulus checks, authorized last spring — millions are owed a catch-up payment for child dependents.

To help work out whether you’re missing a payment, and for how much, the IRS provides a Recovery Rebate Credit Worksheet. You’ll need the IRS’ calculated amount from the letter the agency will send you, called Notice 1444 for the first payment and Notice 1444-B for the second payment.

Now playing:
Watch this:

Second stimulus checks: Everything you need to know

3:22

When’s the soonest I can claim a stimulus credit on my taxes?

According to the IRS, you’ll be able to claim your missing payment on your taxes in about a month, with any payments going out after. The IRS said you can start preparing your taxes now — through its Free File tax preparation service if you qualify to use it — or through a tax-preparation service. The first day the IRS will begin accepting and processing individual tax returns is Feb. 12. The tax-filing deadline is April 15 this year.

What happens if I wait until April 15 to send in my taxes?

April 15 is the due date for all 2020 tax returns, but filing your taxes sooner will not only potentially speed up delivery for any tax refund you might collect, it will also position you to get any missing stimulus money weeks or even months faster than if you wait.

Can my tax filing this year speed up or slow down my third stimulus check?

That depends. Since the third stimulus check isn’t final and we can only start to guess at when the next stimulus payment round will come, one way to potentially set yourself up to receive it first is to sign up for direct deposit with the IRS, if you haven’t already.

What if I’m a ‘nonfiler’ and not usually required to file a tax return?

According to the IRS, tax nonfilers also need to file Form 1040 or Form 1040-SR to claim the Recovery Rebate Credit. The IRS says anyone with an income of $72,000 or less can file a federal tax return electronically for free through the IRS Free File service.

Will I have to pay taxes on my stimulus check money?

No, a stimulus payment doesn’t count as income so you won’t owe tax on it, the IRS has said. 

I didn’t file a tax return in 2019. Do I still qualify for a payment?

If you weren’t required to file a 2019 tax return because you were below income limits or you receive federal benefits such as Social Security, you could still qualify for a payment. Up to 9 million people who fell into this “non-filers” category were owed a first stimulus payment as of last fall.

Though many people in this category should’ve received their second payment automatically, if the IRS doesn’t send your money by the start of tax-filing season, you’ll need to file a federal tax return this year to claim your missing payment with the Recovery Rebate Credit, the Tax Foundation said.

How does the total stimulus amount I’m eligible to receive relate to my tax returns?

The IRS uses the adjusted gross income, or AGI, from your 2019 federal tax return to calculate how much of the $600 payment and how much of your future payment your household will receive. (We explain here how the IRS works out your total payment.) Your AGI may be a different figure from your annual salary or take-home pay, based on a variety of factors. 

What’s the connection between taxes, stimulus checks and dependents?

For the second check, you could receive up to a $600 payment for each dependent under age 17 whom you claim on your taxes. The definition was more narrow than dependents who’d be eligible for certain credits under tax law, including children 17 and older, dependents of any age with disabilities, and older adult relatives. 

The third stimulus check under Biden’s $1.9 trillion proposal would seek to widen the definition for its proposed $1,400 payment. (Here’s what we know about its timeline.)

Am I eligible for stimulus money if I lost my job or got a new one since I last filed taxes?

If your financial situation changed after you filed your 2019 tax return — for example, you received less income — you can claim that additional amount on your 2020 tax return when you file this year.

Does my stimulus check affect how much I’ll owe on this year’s taxes?

If you got a payment last year, it won’t reduce your tax refund or increase what you owe when you file your 2020 tax return this year. The payment also doesn’t count as income to determine if you’re eligible for federal government assistance or benefit programs.

Can my 2019 tax returns help deliver missing stimulus money quicker?

Depending on your personal tax situation, the Recovery Rebate Credit for your missing stimulus money would either reduce the total amount you owe to the IRS or give you a larger tax refund.

If the IRS has your direct deposit information from a previous federal tax return, the agency will attempt to deposit your check in the bank account you provided. If you receive your tax refund by check in the mail, however, or if the IRS info or your bank information is out of date, the agency will send your refund in the mail. The IRS didn’t accept direct deposit information for the $600 check, but you should be able to register a new account with your 2020 tax filing.

Do I have to send my check back if I qualify for less with next year’s taxes?

You won’t be required to pay back a stimulus payment if, based on your 2020 tax returns, you no longer qualify for the amount you received. Here’s when the IRS expects you to return full or partial stimulus check payments.

Could the IRS garnish my stimulus payment to cover other expenses I owe?

For the second check, if you owe federal taxes or have other federal debts, the IRS won’t reduce your stimulus payment to cover those. It also won’t redirect any past-due child support you owe. And debt collectors can’t garnish your payment either.

For more, here’s everything you need to know about stimulus checks.