Remember those stimulus checks from earlier this year? They helped us through some tough times – economically and personally.
Maybe you used yours to consolidate debt, maybe you’re using it for groceries or childcare. Regardless of how you used your checks, you may be wondering about the stimulus’ affect on tax returns in 2022.
Here’s what you need to know:
- Economic Impact Payments (aka Stimulus Payments) are not considered taxable income by the IRS.
This is great news! Those checks, no matter how they were spent, are not taxable. Now, it’s important to remember this one thing about taxes: a lot depends on how you file. If you include them as income when you file, you will likely pay more in taxes than you needed to. When filing your taxes in 2022, do not include your Stimulus as income.
- There were three Stimulus Payments. The first two should have been reported on your 2020 tax return. The third payment will be reported on your 2021 tax return.
- If you didn’t automatically receive your third Stimulus payment, you can claim it when filing taxes as a Recovery Rebate Credit. That way, you will receive the equivalent of a third Stimulus Payment in the form of a tax refund.
The main difference between a Stimulus Check and a Recovery Rebate Credit is whether you received it as a check in the mail or will receive it as a tax refund. If you need help sorting out this – or any! – tax information, file with World Finance today. Getting an early start on your taxes can alleviate the stress of tax season and get you your refund quicker. We’ll help you make sense of your taxes.