Stimulus checks and your 2020 taxes: What to know, whenever you file


Taxes and your stimulus check have a special bond this year.


Angela Lang/CNET

Tax-filing season is just days away — on Feb. 12. This Friday, the IRS will begin accepting and processing federal tax returns. And this year, your stimulus check money may be tied to filling out your tax forms in two different ways. Congress and the IRS linked the first two direct payments to your taxes, and your filing status is equally important for a third stimulus check — even if you’re a nonfiler. For example, knowing how the IRS calculates the amount of money that you’re due can tell you if you should expect to receive a bigger or smaller check than before — or none at all.

We still aren’t totally sure how a third stimulus check will work alongside the timing for 2020 taxes, but there is a new proposal. The IRS also is using this year’s return (for taxes on your 2020 income) to make good on missing stimulus check money. Anyone who didn’t get a first or second stimulus payment can claim the money as a Recovery Rebate Credit, which the agency has built directly into the tax return process. And when you file, it’s a good idea to sign up for direct deposit with the IRS, if you haven’t yet. (We also recommend filing taxes as early as possible.)

Navigating this tax season is complicated no matter how you look at it, with new rules for COVID-19 in addition to stimulus checks. We 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 the status of a third stimulus check for up to $1,400 per qualified adult. And here’s why the next check could be “targeted.”

How could my 2020 taxes factor in to the third stimulus check?

We’re waiting for lawmakers to decide this very question. So far what we know is that a third check might be based on 2019 or 2020 taxes, and that if your situation changed dramatically between the two years, you could potentially get the full amount, even if it takes the IRS to process the paperwork by months, according to The Washington Post

The timeline for a third stimulus check could very well fall within tax season (April 15 is the due date), which complicates matters quite a bit, especially since the IRS is already collapsing make-up stimulus money with your tax refund this year (more below).

I never got my second stimulus check. What can I do? 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 2020 Form 1040 or Form 1040-SR

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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.

When should I claim a stimulus credit on my taxes?

According to the IRS, you’ll be able to claim a missing payment on your taxes starting next week, with any payments going out after you file. You can start preparing your taxes now — through the IRS’ 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, but you can file a tax extension if you can’t make the deadline.

What happens if I wait until the April 15 deadline to file 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, bit also it will position you to get any missing stimulus money weeks or even months faster. We made a handy comparison chart here that looks at the timing.

Will filing my taxes this year speed up or slow down my third stimulus payment?

That depends. Since a third stimulus payment is being worked out and we can only guess when the next stimulus payment round will come, one potential way to receive it first is to sign up for direct deposit with the IRS, if you haven’t already.

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The IRS uses your tax returns to calculate, and in some cases process, your stimulus payment.


Sarah Tew/CNET

What if I’m a ‘nonfiler’ and usually don’t file my taxes?

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 any of the stimulus check money I received?

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 my taxes in 2019. Can I still get 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 (including through SSI and SSDI programs), you may still qualify for a payment. Up to 9 million people who fell into this nonfilers category were owed a first stimulus payment as of last fall.

Though many people in this category should have 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 is my stimulus payment total related 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, since it’s based on a variety of factors. 

How are taxes, stimulus checks and dependents connected together?

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 narrower than for 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 could seek to widen that definition for its proposed $1,400 payment. (Here’s what we know about its timeline.)

Am I eligible for a stimulus payment if I lost my job or got a new one since filing my taxes last year?

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.

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If you weren’t required to file a tax return, you can still qualify for a stimulus check.


Angela Lang/CNET

Will the stimulus payment amount I received 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.

Could my 2019 tax returns help get my missing stimulus payment 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 consider registering a new direct deposit account with your 2020 tax filing.

Will I have to send my stimulus check back to the IRS 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.

Will the IRS garnish my stimulus payment to cover other expenses I owe, like federal taxes?

For the second check, the IRS won’t reduce your stimulus payment to cover any past-due child support you owe, and debt collectors can’t garnish your payment either.

However, the protections from the Consolidated Appropriations Act that prevented the IRS from garnishing your stimulus check for unpaid taxes do not apply to people who are claiming their missing stimulus checks on their tax returns

“If you are an eligible individual who has not yet received your full EIP and you have certain outstanding debts, some or all of your unpaid stimulus payment will be withheld to offset those debts,” the Taxpayer Advocate Service said in a blog post. The IRS is looking into this issue.

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



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