Tax treatment of the Economic Impact Payments (Stimulus Checks)

The stimulus money you received is not taxable, but you do need to know the amount received in order to properly file your 2020 tax return and to claim the Recovery Rebate Credit if you are eligible.

The recovery rebate credit was added for 2020 as part of the Cares act, to reconcile your stimulus payment on your 2020 tax return. The Appropriations Act of 2021 added additional funds to this credit, which basically served as a second stimulus payment for most taxpayers. If you received the full amount you qualified for in 2020, for both rounds of stimulus, you will not receive the credit and don’t need to do anything further. If you are eligible for the payment but didn’t receive the full amount you’re qualified for, you can fill out the recovery rebate credit section on your 2020 tax return to claim a refund of the amount you were underpaid.

If you received a stimulus payment in 2020, you should receive notice 1444 from the IRS with the amount listed. When your tax return is created the amounts you received are entered to calculate the rebate credit. If you didn’t receive the 1444 and don’t know how much you received, check your bank statement and look for your direct deposit from the IRS Treasury. You can also create an account on the IRS website that will tell you how much you received and when. Go to IRS.gov/coronavirus/get-my-payment to get more information. It’s important to provide this information to your CPA so that you don’t miss out on a credit or inadvertently file for something that you’re not eligible to receive.

Please contact me if you need further assistance in claiming your Recovery Rebate Credit

Bradley Gay, CPA
[email protected]