Since the first stimulus payment in 2020, there have been two new stimulus checks sent out. You might be wondering how to report this stimulus money on your 2020 tax return. Here is everything you need to know about where to add that money to your tax return.
Back in March of 2020, federal lawmakers enacted an economic stimulus package as a way to support families during the challenging economic times caused by the coronavirus pandemic. That stimulus bill was approved for $2 trillion – enough to provide most American families with direct payments of up to $1,200 per taxpayer.
Those stimulus checks are also referred to as economic impact payments or recovery rebates. Technically, they served as an advanced tax credit on your 2020 income taxes. Recipients received them by either direct deposit to bank accounts or debit cards, or through a mailed check.
This was followed by a second stimulus check in January 2021 and a third stimulus check in March 2021.
Reporting the stimulus money on your tax return is a new process for filers. TaxAct, however, makes it easy and will even help you determine if you’re eligible for more.
When filing with TaxAct, you will be asked to enter the amount of your stimulus payment. With the recent passing of the third stimulus payment, you’ll be asked to enter both payments (if received).
If you need help finding the amounts you received, there are a couple of options. First, check if you received and saved Notice 1444 from the IRS. That document was sent via mail and lists the first stimulus amount you received in 2020. If you can’t find your Notice 1444, don’t sweat it. Many people accidentally threw the form away before they realized what it was for. You can also look back on your bank statements to find the deposit amount. The majority of stimulus amounts were deposited during the month of April, so we recommend first looking at your April statement. May and June are also possibilities if your stimulus payment was delayed for any reason.
Once you’ve entered the stimulus amount, TaxAct will then calculate whether or not you received the correct amount or if you are eligible for more. Any additional amount will be added to your 2020 refund as a tax credit. And don’t worry if you received more than you should have; you don’t have to pay any of that money back.
If you haven’t received your third stimulus payment by the time you want to file your 2020 return, TaxAct will ask you several qualifying questions to accurately calculate how much you should receive. If not enough information is available, you won’t be able to file until you can provide the detail needed for TaxAct to help you accurately report the amount on your return. Language in the new COVID-19 relief bill issues payments of up to $1,400 per taxpayer with an additional $1,400 per dependent.
Regardless of the situation, TaxAct will explain why you received the amount of money you did according to your tax situation. It will also explain whether you are eligible for more. For example, let’s say you and your spouse received the third round of stimulus checks equal to $2,800 combined, which was based on your 2019 tax information. But you had a child in 2020, so based on your 2020 tax situation (aka the true basis of the stimulus payment), you are now owed an additional $1,400 for your new dependent. TaxAct will calculate that scenario for you and let you know if you are due any additional money.
The second round of stimulus checks is based on the adjusted gross income on your 2019 tax return, which means if you are due more than what you receive the second time, you’ll also receive that money as a credit via your 2020 tax refund. The third round of stimulus checks is based on either your 2019 tax return or, if you did your tax filing early, your 2020 return.
File your taxes online with confidence.
