By: Laurie A. McCarthy, Esquire
- You will not pay taxes on stimulus money
- The IRS does not consider stimulus money to be income.
- The payments are considered to be a credit against your taxes.
- Stimulus payments will not reduce your refund or increase the amount you owe in taxes.
2. Does receiving the first stimulus check guarantee you will qualify for the second round?
- Eligibility rules regarding Adjusted Gross Income (“AGI”) are likely to follow the same guidelines used to determine eligibility for the first round of stimulus checks.
- Eligibility will be determined based upon your AGI in your most recently filed tax return.
- For the first round of stimulus payments, if you had not yet filed your 2019 tax return, the determination was made using your 2018 AGI.
- If your AGI increased in 2019, you may no longer qualify for a stimulus payment, or you may qualify for a lesser amount.
3. Eligible Dependents
- Not all dependents claimed on your tax return qualified for payment under the first stimulus payment (the “CARES Act”).
- It is likely that this second stimulus check will include a payment of $500 for each dependent you claim on your taxes, regardless of age, with no specified cap on the number of dependents.
4. You will not be required to pay back any of the stimulus money
- If you qualified for the first round of stimulus based on your 2018 AGI and now do not qualify for the second stimulus check based on your 2019 AGI, you will not be required to pay back any of the money you have already received.
- If you received someone else’s payment or payment for a deceased family member, the IRS and Treasury Department are looking into ways to get those payments back, but they have advised they will not aggressively pursue recovering those funds.
While no agreement has been reached yet, the chances of reaching an agreement on a second coronavirus stimulus package look more promising now than they have in months. Negotiators are pressing to make a deal on a new relief package; if they are able to reach an agreement, Treasury Secretary Steven Mnuchin stated that it would take about one week to process the first payments.
The Law Firm of DiOrio & Sereni, LLP is a full-service law firm in Media, Delaware County, Pennsylvania. We strive to help people, businesses and institutions throughout Southeastern Pennsylvania solve legal problems – and even prevent legal problems before they occur. To learn more about the full range of our specific practice areas, please visit www.dioriosereni.com or contact Laurie A. McCarthy, Esquire at 610-565-5700 or at [email protected]
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