How Will Your Stimulus Check Be Taxed?

Doing personal financial projections

It’s almost tax season, and many Americans wonder if they will have to pay taxes on money received from a stimulus check issued from the government. Due to the COVID-19 pandemic, millions of people received stimulus payments and unemployment income in 2020 but are unsure about the circumstances surrounding taxes for these payments.

Numerico offers professional accounting services that can help you understand your 2020 taxes. Whether you need assistance with business taxes, personal income tax, or individual income tax, Numerico can assist you. As consulting experts, our professional accountant team can break down all of your tax details into easy-to-understand terms, including your stimulus check.

What Is a Stimulus Check?

The stimulus check is money the United States government sends to its tax-paying citizens to stimulate the economy in times of economic crisis by giving consumers more money to spend. Typically, a stimulus check is for citizens as a part of a larger federal stimulus package, as was the case of the 2020 CARES Act.

This federal assistance wasn’t entirely unprecedented. United States citizens received a stimulus check during the 2008 recession, too. However, not all tax-paying citizens are eligible to receive a stimulus check. For instance, the CARES Act omits individuals with an annual income of over $75,000 per year and joint filers with a yearly income of $150,000 or more.

Are Stimulus Checks Taxable Income?

Unlike unemployment payments,  stimulus checks from the government are not taxable income. The government doesn’t consider them to be income at all. Instead, the checks fall under the category of “tax credit” that you receive in advance. The government does not consider tax credits to be taxable income, either.

So don’t worry about the stimulus check draining money from that tax refund you expect from the IRS. You won’t find any unexpected tax bill for not withholding money for taxes from your stimulus check

On the other hand, if you received unemployment income this past year, you should be setting aside money for taxes if you did not request to have your taxes withheld. Unfortunately, many people are unaware of this fact and may have a large bill waiting for them this tax season.

I Didn’t Get My Stimulus Check—What Can I Do?

If you didn’t receive your stimulus check or didn’t receive all of the money that you were eligible to receive, you may still be able to get that money. On your 2020 tax return, you can claim a “rebate recovery” credit. However, to receive this money, you will have to file a return, including those who usually do not need to file.

You should have the amount that you received on hand when you file to make filing simple. Notice 1444 that you received will contain all the details.

Numerico | Your Stimulus Check Tax Experts | Livonia, MI

Numerico can be your go-to company for personal income tax advice, bookkeeping, tax relief, and much more. Anyone in Livonia, Dearborn, Westland, or the surrounding communities can contact Numerico at 734.359.7811 to schedule a consultation with our professional staff

We ensure high-quality service that is accurate and personal, which is why many businesses and individuals love working with Numerico. You will receive responsive service that brings a human face to accounting. Numerico doesn’t just help with stimulus check questions—we connect with our clients to handle any financial or tax challenge.

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