A friend does taxes for folks and tells me that the stimulus checks have a negative tax impact. He stated that a family that was due a refund, ended up having the amount of their stimulus check deducted from the amount of their return. Has anyone here had a similar outcome from their stimulus check? Mrs and I didn't receive one so I don't have personal experience...did not sound right to me, but i wouldn't doubt it if it turned out to be so.

Robert

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Robert
SWCA #2906, SWHF #760

AARP says:
"In the somewhat longer words of the IRS: “No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 or 2021 tax return next year."

Your friend might want to go back to tax school. I got letters from the IRS after each stimulus payment:

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Wisdom comes thru fear . . .

I wondered about that...thanks

Robert

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Robert
SWCA #2906, SWHF #760

I’m no tax expert, but maybe your friend shouldn’t be doing OP’s taxes! As I understand it, Stimulus payments were not tax refunds. They were advanced payments of a new "recovery rebate" tax credit for the 2020 tax year. If you weren’t credited enough, you can report it on your 2020 taxes and you’ll receive the additional amount added to your refund.

There was no provision in the law requiring repayment if someone received too much or was paid and didn’t qualify. Initially, estates of dead people who received payment didn’t have to pay that back either, but the IRS changed their mind and now wants it back.

See here: Will I Have to Pay Back Any of My Stimulus Check? | Kiplinger

The first round of Stimulus payments were not exempt from back due child support garnishment, so some had their payment amount reduced. The second round was exempt, so deadbeats received the full credit.

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"I also cook."

For the record, he is not doing mine...based on some of the things I've heard him say, he never would.

Robert

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Robert
SWCA #2906, SWHF #760

I do my taxes with the Turbotax program. The program asks about if you received a stimulus check, but the program already had the amount figured based on previous data. The two stimulus checks had no bearing on my taxes at all - my tiny refund was within a few dollars of last years refund. Now, future checks might be treated differently, but as for this year, all is like there was no stimulus at all.

Based off a post below it appears my thoughts are incorrect. Didn't want to delete comment though because that would confuse the explanation below.

ORIGINAL POST:

I am not a tax person and pay to have mine done but my understanding of the stimulus funds is they are based on your 2020 Adjusted Gross Income.

They were set up on a sliding scale for those who make less than $100,000 a year (filing single) and $200,000 a year (filing joint).

If you make under $75,000 a year (AGI) then you would receive the full amount that was issued. If you make between $75-$100,000 a year the amount you would receive would be reduced based on the amount you make over $75,000 down to getting $0 if you make $100,001 a year.

If you file jointly the reduction occurs between $150,000 (below and you would get it all) and $200,000 (go over and you get $0.

When they issued the checks the amount was based off your 2019 income, which was all they had to go on at the time. So if you were below the threshold in 2019 you got a check.

If by some chance you go to file in 2020 and you are above the listed thresholds (say you made $68,000 AGI in 2019 and in 2020 you made $80,000) your amount of stimulus would be reduced accordingly. The same would apply in reduction if filing jointly with the thresholds for there.

The only way for the IRS to recoup that money would be to take it out of your refund for 2020 or to cause you to have to pay taxes.

So while the stimulus itself is not taxed if you made to much money to qualify it could clearly affect your refund.

On the current stimulus they are considering the thresholds will be the same on the low end ($75,000 and 150,000) but the top end on these will possibly be as low as $80,000 and $160,000 accordingly.

I hope this makes sense of how you can get a stimulus and have it affect your tax return refund or amount owed.

If you made more in 2019 (and didn't get a check) and less in 2020 then you can go in and take a tax credit I believe for the amount the stimulus should have been.

The reason it asks is if you were due a stimulus payment and did not receive one, it could be added to your refund, or subtracted from the amount you owe.

Your friend is doing his "clients" a grave disservice. I can't begin to tell you about the horror stories I hear about the people out there who buy the tax preparer program and set up a tax preparer business. Kinda like buying the bankruptcy program and figuring that as long as you can figure out how to fill in the blanks that makes you a wqualified non pawyer bankruptcy preparer. I'll stop here

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Forum consigliere

Sounds like a solid decision based on the facts you have provided.

As I understand it, Stimulus payments were not tax refunds. They were advanced payments of a new "recovery rebate" tax credit for the 2020 tax year. If you weren’t credited enough, you can report it on your 2020 taxes and you’ll receive the additional amount added to your refund.

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I use Turbo Tax. Was totally surprised when I was near completion of return that it stated I did not receive my total stimulus benefits and it added the amount to my Federal refund. I knew my income level would not get me the total stimulus money allowed for me and my wife but had no idea it would be given back when filing 2020 taxes.
Turbo Tax did include a statement that stated this added stimulus money would be reviewed by IRS before final approval.
We'll see when refund arrives.
Ray

What's a stimulus check?

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Dave Ramsey Cultist

When I took my info to my accountant they asked if the amount earlier this year had been received, as if it hadn't it would be added to any tax refund due.

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H Richard
SWCA1967 SWHF244

A friend of mine works for Block and tells me the refunds are going to be slow this year and if congress passes the next stimulus even slower. So if you are looking for your refund to buy that gun have your eye on you may have much longer wait.

I’m pretty sure 2020 refunds will not be reduced by any overpayment amount.

This is from The IRS website:

See question J3 here: Economic Impact Payment Information Center — Topic J: Reconciling on Your 2020 Tax Return | Internal Revenue Service

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"I also cook."

Unless they got a larger stimulus amount than they were due, that story does not match up to the current IRS guidelines. But if they received too much the difference was probably reclaimed. I don't know enough facts of the story or have enough info about the current IRS policy to say either way.

On a lighter note, the wife and I got about a thousand dollars less than the max amount available for the stimulus spread between the two rounds/checks. I just finished my taxes using TurboTax and it recalculated what we were owed (it said we were eligible for the max amount) and the difference was added to our refund!!!

No matter how you cut it, this so called free money ain't going to be free in the long run..No matter who does your taxes...

Even the death taxes are going up.

Pay the man now, or pay him later for this so called free money, but we all are going to pay


WuzzFuzz

The last I saw printed, 6.5 million paper tax filings for 2019 have not even been opened yet. I'm still waiting !

I have no idea about if the guy did the taxes correctly or not. The chances of an audit are really slim nowadays though.

What drives me nuts is that we are continually picking our own pockets as well as the pockets of generations that aren't even born yet.

I wish I would have used Roth IRA's a bit more when I was younger. I have a feeling I will pay more on the backside than the additional growth benefit of the pre tax investment over the years.

Either negligent preparation or a scam. Is preparer also processing payment and e-filing?

Limitations on Roth IRAs were prohibitive most of our working years, they have loosened up the last few years and are still restrictive.

The only thing worse than paying taxes, is not having to pay taxes.

Happy tax Season.

My LEO pension is tax free in Missouri . . .

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Wisdom comes thru fear . . .

Just an FYI for those curious: I e filed with Turbo Tax, and I received my refund via direct deposit in about 10 days. I don't consider that to be slow.

And no, the stimulus amounts DO NOT affect the amount of any refund or what you may owe to the IRS except, as mentioned previously, if you did not receive the proper amount it may be added to your refund assuming the IRS confirms the deficit.

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Or something like that . . .

I got one , a credit card thing. I threw it in the stove. And I am far from wealthy. I do not want our country any further in debt.

I have to admire a man who stands by his values even when it costs him something.

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Or something like that . . .

I did my taxes with Turbotax online as soon as all the paperwork came in. This was early in February. I got my refund in just over 2 weeks which is about normal.

Look for your name to start being published in the local newspaper's legal advertisements by your state's unclaimed assets division in a couple years. In Missouri, the division does it about once a year. That money will always be yours, or your estate's . . .

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Wisdom comes thru fear . . .

Got both my federal and state refund about 10 days after filing them electronically. I use TurboTax.

I'm not required to file a federal income tax return anymore so I usually don't. But I didn't get the most recent $600 stimulus payment and the IRS website said that I would have to file a return this year and claim it as a credit in order to get it. I don't know why as they originally said all Social Security recipients would get it automatically, but that's not the case as I know others in the same situation.

I filed the free return on the IRS website and had the payment direct deposited a little over two weeks later.

Having your tax refund reduced by any stimulus payment dollar for dollar makes no sense at all. I know of no one in the 100% tax bracket.

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Mike
S&WCA #3065

That would be the least they should do. Thank you.

I can understand your feelings, except that money is still tied to your name. After a few years it will show up in the "Unclaimed Assets" section of the legal notices in some of your state's larger newspapers and on one of those Unclaimed Assets websites the government runs.

If you really wanted to "do the right thing" you should have cashed it out and sent a check back to the feds marked for deposit into the US Treasury. On the other hand, your local food bank or church charity would have been even more grateful. As it sits, your grandkids will still be paying for what you haven't yet claimed.

Sorry for being such a downer...

That is true. My dad used to tell me paying high taxes is a good problem to have.

My first hand experience: Got the stimulus and got all the refund that was due me from my 2020 Federal and state tax returns.