Yes, thats right.
That money will be completely yours to spend however you see fit.
Nothing will be deducted for taxes.
This post refers to the 2020 tax season. For the most up-to-date info, check out ourrecent tax articles.
Not a single cent.
You wont have a lower tax refund next year because of the payments.
You also wont owe more for 2020 because you got a check.
If youre married with income below $150,000, you will receive the entire $2,400.
Youll also receive$500 for each dependent childunder age 16.
None of it will count as taxable income.
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Go ahead and start now, but be sure to bookmark this post so you could easily return later.
Well keep it updated as offers changes or expire.
Youre not the only one.
Its a Tax Credit Advance, Not a Tax Refund Advance.
Heres Why Thats Important
The coronavirus relief checks are actually an advance on a 2020 tax credit.
They are NOT an advance on your 2020 refund.
But you may have heard or read incorrect information describing the payments as a refund advance.
There was a lot of confusion surrounding this point when the$2.2 trillion CARES Actwas signed into law.
But hey, thats bound to happen with any 880-page piece of legislation.
A tax credit reduces your tax bill dollar for dollar.
A $1,200 refundable tax credit really does put an extra $1,200 in your pocket.
But these payments are meant to provide emergency relief.
The government knows we cant afford to wait until early 2021 to get that cash.
Now lets look at what would happen if these payments were a refund advance.
(And lets all say it together: The relief checks ARE NOT a refund advance.)
You wouldnt be getting an extra $1,200 in your pocket.
Fortunately, thats not whats going to happen.
To illustrate how the payments will work, lets take two hypothetical scenarios.
Normal tax year: You receive a $3,200 tax refund when your return is processed.
Year of coronavirus: You receive the $1,200 tax credit as early as mid-April.
You still receive your $2,000 refund when you file your 2020 taxes.
Year of coronavirus: You receive the $1,200 tax credit as early as mid-April.
You still owe $2,000 when you file your 2020 taxes.
The important thing to note is that in both scenarios, the credit doesnt change your overall tax liability.
It gives you an extra $1,200 regardless but you get the payment earlier in the coronavirus example.
But Wait!
But in that case, your coronavirus stimulus check will be processed like a regular tax credit.
You wont get an advance on the credit.
Youll get it in the form of a higher refund or a lower tax bill.
You wont even have to report the money as taxable income.
There are plenty of things to worry about right now.
Paying taxes on your coronavirus relief tax isnt one of them.
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