As the coronavirus continues to spread across the United States, many Americans are experiencing financial hardships either brought on or exacerbated by the pandemic. In order to help offset some of these hardships, the federal government is sending one-time stimulus checks to Americans who make less than $75,000 annually. As the Internal Revenue Service (IRS) continues to send out these $1,200 "economic impact payments," you may be wondering — will the coronavirus stimulus payments have to be paid back? You don't have to worry about cashing in your stimulus check.
With so many Americans slated to receive stimulus checks, there has been a flurry of confusion and misinformation surrounding these payments. One of the most significant misconceptions about the stimulus checks is that people will have to pay them back when they file their 2020 taxes. If you received or will receive a stimulus check, you can rest easy — you won't need to pay it back, and you won't be taxed on it. Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, tells Elite Daily that "you don't have to repay the rebate," and the IRS confirms this on its FAQ page for the economic impact payments. So where did this confusion come from?
One reason is that these $1,200 stimulus checks are technically advance tax credits for 2020. There are different types of tax credits; some will reduce your tax liability by decreasing the amount of money you owe in taxes, while others, like the stimulus payment, are refund-style. If you qualify to claim a refundable tax credit, and that tax credit value is more that what you owe in taxes — even if you owe $0 — then the government will send you a refund for the difference. According to Forbes, the economic impact payment falls into this category, as a one-time refundable tax credit that Americans can claim based on their income.
In short, this is a brand-new refund credit that everyone gets (as long as they meet the income thresholds), and it's being released now, as a lump payment. You'll still be able to claim this tax credit when you file your 2020 taxes, but you're getting your check now as an advance refund, so you won't get another check when you file.
Because this particular credit didn't exist before, it's not going to change how much you owe in taxes for 2020 or affect your total taxable income this year. The bottom line here, as New York Rep. Alexandria Ocasio-Cortez phrased it in an April 18 tweet, is that there are "no takebacks" with these stimulus checks. So, go ahead and use it to pay your bills, feed your family, or anything else you need to do.
If you think you’re showing symptoms of coronavirus, which include fever, shortness of breath, and cough, call your doctor before going to get tested. If you’re anxious about the virus’s spread in your community, visit the CDC for up-to-date information and resources, or seek out mental health support. You can find all Elite Daily's coverage of coronavirus here.
Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center