Tax season is here, and with all of the changes this year, people want to know if stimulus checks or payments are considered taxable income.
For 2021, there was one stimulus check that went out worth $1,400.
This was the third check out of all three between 2020 and 2021.
On top of that, advanced child tax credit payments went out to Americans who qualified.
This means Americans below a certain income were able to get up to $300 per month for 6 months for their 2021 child tax credit.
States also sent their residents stimulus cash in some cases.
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Can the stimulus check be taxed?
The third stimulus check was signed into law by President Biden in March of 2021.
The payment is considered an advanced tax credit.
It is not considered income so it is not subject to taxation.
It is not going to impact what you get back or owe to the IRS.
This stimulus check was issued as a recovery rebate credit advance.
If you never got the payment or got less than what you were eligible for, you can claim the difference on your tax return under the recovery rebate credit.
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If you were sent more than you should have been because your income went up and the IRS did not know, you do not need to pay it back.
The checks cannot be garnished the way refunds can for paying off child support, federal student loans, or owed taxes.
According to the IRS website, you do not need to report your third stimulus check when filing your tax return.
If you want to claim the recovery rebate credit, you do need to report any information about the stimulus check you have to the IRS.
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Taxes on child tax credit payments
If you were sent child tax credit payments then those were an advance on the tax credit the IRS thought you would be getting.
The payments aren’t income and can not be taxed.
Some payments may end up being worth more than the amount you can claim for 2021. You’ll need to repay that difference.
The difference can be paid when you file your taxes.
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