No, You WON’T Have to Pay Back Your COVID19 Stimulus Check
I was scrolling through Facebook over the weekend and saw a video shared by a friend. In it -- originally shared to Tik Tok by some user named @HunnerJ9797 -- a guy claims that the coming stimulus checks from the IRS is an advance on our 2020 Tax Returns and, therefore, money that will have to be paid back when we file our taxes next year.
"Where am I getting my information? Literally directly from the bill itself," he claims, displaying an internet browser that is, supposedly, the bill package. "See, what they don't tell you," he continues, "is this is just an advance on your next tax return." He refers again to the online document and an article including details on an "Advance Refund Amount." "So that means next year you're automatically gonna owe $1200 come tax season. [...] Media and public is not telling you exactly what this bill is," he concludes.
Naturally, I was immediately concerned. This was the first time I'd heard anything like this and the chances that I'll have $2400 extra sitting around next April is slim to none.
So I called up my dad who's an HR/CFO for a large production company, and together we did some sleuthing for ourselves. Essentially, what we found, is that the guy in the video wasn't entirely wrong; yes -- the money is an advance, but not money we'll have to pay back. It will, however, be money we have to claim on our 2020 taxes.
According to fact-checking website Snopes.com, the claim that we'll have to pay back any COVID19 stimulus checks is False.
...legally the payment is considered a tax credit advanced to the recipient from the (future) 2020 tax return — that is, the return the recipient will file in 2021. This has led some to believe that the payment either needs to be paid back in full in 2020, or that the payment is considered taxable income, or that the payment counts against one’s 2020 tax refund. None of these conclusions, however, is true.
"The most important thing to understand is that the rebate is a bonus amount," Snopes quotes Chye-Ching Huang, senior director of economic policy at the non-partisan Center on Budget and Policy Priorities (CBPP). "The stimulus payment won’t reduce tax refunds for 2020 (when people file in 2021) below what they would have been otherwise."
The stimulus payment is a unique fully refundable tax credit. Even if you don’t owe a penny of tax, you get the full $1,200 per person provided you don’t earn too much (and you’re not a dependent who is 17 years old or over). Plus, you’re getting this special tax credit in advance—if the IRS has bank account information for you, you will likely see the stimulus money in your checking account in the next few weeks.
Forbes also confirms that you will technically claim the credit on your 2020 taxes, assuming you qualify for it.
Finally, the IRS itself -- at the official website for Economic Impact Payments -- says nothing (that I could find) about paying back the COVID-19 stimulus checks. I think its safe to say, then, that the COVID-19 stimulus checks coming our way are free to save or spend as we need. Believing that to be the case, I'm not sure who the guy in the video above is, but I'm glad he's not my tax guy!
Do you know anything else about the COVID-19 stimulus package or believe I shared anything wrong?