With individuals who earn up to $75,000 eligible to receive $1,200 checks and couples who earn up to $150,000 eligible to receive $2,400 along with $500 for dependents 16 and under, here are 5 myths about the stimulus checks debunked.
The stimulus checks are taxable
Stimulus checks are organized as refundable tax credits. They are not taxable income. Because they're refundable tax credits, people who don't typically file tax returns qualify to receive the checks, according to independent think tank the Tax Foundation.
Stimulus checks will have to be repaid
If all the information in your tax return is accurate, you will not have to repay the check next spring when tax season rolls around, CNBC reported.
It’s also possible to receive more money upon filing 2020 taxes. Even though the checks are based on 2018 or 2019 returns, technically, they are a credit on 2020 tax returns. If you end up needing to receive a larger tax credit based on your adjusted gross income for 2020, you’ll get the difference in 2021.
“If a taxpayer’s income drops in 2020, they will be eligible for any remaining rebate credit they were not able to claim using their 2019 or 2018 return,” the Tax Foundation said.
The think tank also said the IRS won't penalize you if your 2020 adjusted gross income is more than your AGI this year.
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The checks will cut into your tax refund for 2020
According to Money.com, despite Americans coming across the phrase "advance on future tax refunds," in regards to the stimulus checks, it doesn't mean you'll receive less money next tax season. "Advance" refers to "a special tax credit that'll appear on the tax return you file in 2021 for the 2020 tax year," the personal finance news website said. If the stimulus checks didn't exist, the special credit wouldn't either. The IRS stimulus check is in addition to what you'd already get — it's not a portion of your 2020 tax refund that you're receiving early.
You can’t get a stimulus check if you don’t have direct deposit
While Treasury Secretary Steven Mnuchin said at a White House coronavirus task force briefing that "we don't want to send checks in this environment," some people will receive rebate checks.
People who don't use a direct deposit will receive paper checks in the mail, Business Insider reported. However, it will take longer for those checks to arrive. An internal memo reviewed by the Washington Post said the lowest earners would receive checks first. People who qualify for stimulus payments and are among the highest earners will likely have to wait until September for their mailed checks to arrive.
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However, if you have not provided direct deposit details to the IRS because you haven't been owed a refund, for example, the IRS announced a portal for non-filers in a news release. Non-filers can provide direct deposit information here.
Benefits recipients are ineligible to receive stimulus checks
For the most part, people who have a Social Security number and meet the eligibility requirements will receive a stimulus check. The IRS will use the bank account information already on file, so people with benefits from Social Security retirement, disability (SSDI) and Railroad Retirement who otherwise qualify will not need to file a new tax return to receive their check.
Still, Forbes reports there are certain instances where people may not receive a stimulus check, including being a college student or owing child support.