You may have heard many things about government stimulus payments and wonder how it affects you. You may also have concerns about how this money will affect your next year's taxes or if you have to pay it back. Here is more information about what stimulus payments are, what they are supposed to do, and how they affect your taxes.
What Are Stimulus Payments?
Stimulus payments are benefits authorized by the federal government. They are used in times of severe economic uncertainty. The payments are usually based on income and tax filing status. In some cases, they are only available to people who receive certain federal benefits.
What Do Stimulus Payments Do?
The goal of these stimulus payments is to stimulate the economy. They were given in the expectation that people would use them to pay their bills or even splurge. The added spending gives a boost to a declining economy. These cash payments are often included with other incentives.
Does Everyone Get a Stimulus Payment?
Usually, only lower-income people get stimulus payments. In some cases, the payments are given on a sliding scale. Everyone below a certain income level gets the full amount. That amount is prorated for people who are higher incomes. People at the highest income levels will not get any stimulus payments at all.
Will Stimulus Payments Go Against a Refund?
Stimulus payments are a special tax credit. You are getting a special credit, paid in advance, towards next year's taxes. This is in addition to the credits you would normally get. The stimulus check has no effect on how much you owe or how much refund you receive.
For example, say you don't get a stimulus payment because you moved or some other reason, but you were otherwise qualified. Next year, you will get to write off that stimulus amount on your taxes.
Will Stimulus Payments Need to Be Repaid?
If you qualify to receive the stimulus payment, then you should not have to pay it back. If you owe back taxes, you will still receive your payment. However, if you get too much back or weren't qualified, then things get trickier. Your best bet is to talk to your tax preparer if you think that you've received too much of a stimulus payment.
In most cases, stimulus payments are a relief to those who are qualified to get them. If you have concerns about stimulus payments, how they might affect your taxes, or whether you may need to repay them, then talk to a tax service for more information. These tax experts can look at your specific financial information and give you more definite answers for your case.Share