I've been trying to find out the answer to this question for weeks but NOBODY seems to know the answer to this question - and all of the IRS publications I've read have also been silent on this question or worse - totally confusing.
My question is - are the two stimulus checks we received last year (I received the full amount both times) considered taxable income or not? And if yes on what line on the 2020 1040-SR form will I claim it? If it is not taxable income do I still have to list it as some other income somewhere else on the 1040-SR?
Both the first and second economic impact payments are not considered taxable income to taxpayers, says Sarah Shannonhouse, AICPA manager for Tax Practice & Ethics. “Further, the payments will not reduce a taxpayer's refund or increase the amount of tax liability when the 2020 tax return is filed,” she notes.
Shannonhouse explains: The economic impact payments are technically advanced payments of the 2020 Recovery Rebate Credit, which is part of the 2020 tax return. To get cash into the hands of taxpayers immediately, the IRS sent “advance payments” of this credit, and based the calculations of the payments on the most recently filed tax return (either 2018 or 2019 for the first payment or the 2019 return for the second payment). Alternatively, if neither the 2018 or 2019 returns were filed at the time of payment issuance, taxpayers could have submitted information through the IRS Non-Filer’s tool (closed in November), or the IRS obtained the information from other government agencies.
“The advanced payments will be reconciled with the Recovery Rebate Credit amount when the 2020 tax return is filed,” notes Shannonhouse. “The final credit amount will be reported on Line 30 of the 2020 Forms 1040 or 1040-SR. The 2020 tax return instructions also include a worksheet for use in figuring the amount of the Recovery Rebate Credit.”
She adds, “Taxpayers should keep in mind that the IRS mailed Notice 1444 to confirm the first economic payment amount and Notice 1444-B for the second economic impact payment, issued approximately two weeks after each of the payments were made. Taxpayers should keep these notices for their records.” The Get My Payment tool is available to check the status of the payments for individual taxpayers.
“If you need a copy of Notice 1444 or 1444-B, that information should be included on the account transcript for the taxpayer. Account transcripts can be accessed on the IRS website: https://www.irs.gov/individuals/get-transcript,” Shannonhouse says.
For more information, check out Recovery Rebate Credit.
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I've been trying to find out the answer to this question for weeks but NOBODY seems to know the answer to this question - and all of the IRS publications I've read have also been silent on this question or worse - totally confusing. Subscribe for full article
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