You don't need to report it or reconcile it. If the stimulus payment you received in 2020 was for the correct amount, when you fill out your 1040, 'you don't need to do anything. How to Claim Missing Stimulus Money on Your 2020 Tax Return In effect, people who have received stimulus checks have simply been taking advantage of this early tax credit, known as the Recovery Rebate Credit, without having to do any of the extra paperwork you would normally need to do to claim this kind of tax break. With an advance credit, you get the money before you file your taxes. So, for example, if your tax bill is $500, but you have a refundable credit for $750, you'd end up with a check for $250 from the government. Typically, tax credits reduce your tax bill dollar for dollar if they're refundable, they can take the amount you owe in taxes all the way down to zero and the government will pay you any remaining balance. To ensure recipients wouldn't be taxed on the money, lawmakers structured the stimulus payments as an advance refundable tax credit for 2020. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 or 2021 tax return.' What is the Recovery Rebate Credit? In the official words of the Internal Revenue System: 'The payment is not income and taxpayers will not owe tax on it. That's welcome news for the tens of millions of taxpayers who received stimulus checks last year as the 2020 tax-filing season gets under way on February 12. You won't owe any taxes on that money when you file your 2020 return this year, and you won't owe taxes on any additional stimulus payments you may get in 2021 either. Photo Illustration by Scott Olson/Getty Imagesīreathe a sigh of relief: Every cent of the money you received last year as part of the federal government's pandemic relief efforts, including the initial $1,200 stimulus payment that most Americans got in 2020 and the second $600 check that went out in December and January, is yours to keep.

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