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Many taxpayers who received stimulus payments in 2020 wonder how it will be treated when the time comes to file their 2020 tax returns, whether they got the correct amount, or why they did not get it in the first place.

Economic Impact Payments or stimulus payments received in 2020 and early 2021 are not taxable income. Keep notices 1444-B you received regarding your stimulus payments with your 2020 tax records, you will need to provide them to your tax preparer. If you did not keep (or have lost) the notices, you will need to request an Account Transcript for 2020 either online through your IRS “Get Transcripts” account or via phone for mail delivery. It may take several weeks to get transcripts in the mail nowadays, however, your tax preparer can help you obtain transcripts much faster.

Anyone who did not receive stimulus payment(s) or their payment was not the correct amount due to reduced income in 2020, a change in marital filing status, or a change in the number of dependents – including those who are not normally required to file a federal tax return – will need to claim it as a recovery rebate credit on their 2020 federal income tax return. Remember, if you can be claimed as a dependent on someone’s return, you are not eligible for stimulus checks or rebate credit, even if you were not claimed as a dependent.

You may be eligible for a recovery rebate credit if you did not receive a second stimulus payment, and you and your spouse file jointly and only one spouse has a valid SSN. Such couples with a non-immigrant status spouse who has an ITIN or no tax ID, were not eligible for the first round of stimulus payments.

You do not need to complete information about the recovery rebate credit on your 2020 federal tax return if you received the maximum amount of benefits as follows:

$1,200 plus $500 for each qualifying child you had in 2020 for the first round and $600 for you and $600 for each qualifying child for the second round, or
$2,400 for joint filers in 2020 plus $500 for each qualifying child you had in 2020 for the first round and $1,200 plus $600 for each qualifying child for the second round.

If you received a stimulus payment greater than the recovery rebate credit calculated on the 2020 return (due to increased income in 2020, for example), in most cases you still get to keep the original payment. The excess does not need to be repaid to the IRS. Exceptions include death of the taxpayer or a spouse before receipt of the payment, and nonresident alien status in 2020.

If you did not receive stimulus payments and instead claim recovery rebate credit on your 2020 tax return, and owe money to the IRS, this credit will first offset your 2020 tax liability, and the remainder, if any, will be applied to your prior tax debt. You will not receive a refund, even though economic impact payments were protected from garnishment and federal and state offset programs.

If you are not sure how to calculate a recovery rebate credit, find a professional tax preparer to help you out.

Irina Bobrova is an Enrolled Agent who represents taxpayers before the IRS to resolve their IRS problems.

Dear Friends!

This year, our community has faced tremendous challenges. The COVID-19 pandemic has taken the lives of loved ones far too soon and placed millions of families into economic hardship. Many celebrations, traditions, and even daily activities have been put on hold as we isolated ourselves to keep each other safe from harm. As we all hope to return to a sense of normalcy, we must continue to follow social distancing guidelines as we try to heal from the pandemic. Although this year has been difficult for us all, our community has shown incredible strength. Throughout the past few months, we have seen heroes emerge to keep us safe, healthy, and thriving. But our work is not over. As public health experts warn of a COVID-19 resurgence, we must all continue to do our part to keep each other safe. In Congress, I will keep fighting to get Floridians the help they need to get back on their feet.

One in twenty seniors in the U.S. is a target of fraud schemes, costing them at least $36.5 billion per year. Yet, the National Adult Protective Services Association has found that only 1 in 44 seniors actually report that they are victims of a fraud scheme. Recently the House passed my bill, the Seniors Fraud Prevention Act, that would help protect seniors and their families from becoming the victims of fraudulent schemes designed to steal their assets. I was proud to work with Rep. Buchanan, Rep. Peter Welch, Senator Klobuchar, and Senator Collins to introduce this legislation that would create an office within the Federal Trade Commission charged with tracking scams, educating and alerting seniors to new scams, and establishing a more effective complaint system to ensure reports of fraud are quickly addressed by the appropriate law enforcement agency.

Recently, I joined Rep. Debbie Mucarsel-Powell and Rep. Kathy Castor to release a climate report prepared by the House Oversight Committee outlining the health benefits for the state of Florida if the United States meets the goals of the Paris Agreement. The report outlines that in Florida alone, meeting the goals of the Paris Agreement could prevent 101,000 deaths and 40,000 emergency room visits and hospitalizations for cardiovascular and respiratory disease over the next 50 years. The state would avoid more than 23 million lost workdays. Collectively, avoiding these health issues would save Florida over $750 billion. I wish you and your family a safe and happy new year and encourage you to visit CDC.gov for current social distancing guidelines. As always, please feel free to reach out to our office if we can be of assistance.

Tag: federal

How COVID-19 Stimulus Payments will Affect Your 2020 Tax Return

Congressman Ted Deutch (D-FL, 22nd District)