October 23, 2020
What does a stimulus check have to do with taxes? Everything. Here's what to know

How your federal taxes could change your next stimulus check


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Taxes and stimulus checks are intricately linked. We’ll show you how.


Angela Lang/CNET

Negotiators have a few weeks to reach an agreement on a deal for another economic rescue package before the Nov. 3 election, with many of the details in a new bill still to be worked out. One key piece in a second payment already played a major role in the first: The size of a stimulus check and your taxes are tied together.

Your federal tax returns determine how much money you’re entitled to and who even qualifies for a direct payment, from dependents to adults, older adults and retirees. And for those who aren’t required to file a federal tax return, Congress made provisions for those people to receive checks, too. 

If you got the first stimulus check of up to $1,200, does that count as income when you file your taxes next year? Based on current negotiations, could that change with a second payment? How do dependents figure in? And what happens if your income is different between your first check and a second one? 

We can help answer your questions about how tax returns and stimulus checks go together. And here are the most important things to know about stimulus checks overall.


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How do my tax returns determine the size of my stimulus check?

The IRS uses the adjusted gross income, or AGI, from your 2019 federal tax return (or your 2018 return if didn’t file one in 2019) to calculate your payment scale. Your AGI may be a different figure from your annual salary or take-home pay based on a variety of factors. 

The income limits that decide exactly how much of the $1,200 per adult your household gets — and if you’re qualified to receive a check in the first place — stem directly from the AGI on your last batch of taxes, not necessarily what your income is at the time the checks go out.

What’s the relationship between dependents and taxes?

For the economic impact payment authorized under the CARES Act this spring, you could receive up to a $500 payment for each dependent under age 17 you claim on your taxes. The narrow definition excluded others who under tax law may also meet the requirements of a dependent, for both children 17 and older and adult relatives.

The competing proposals on the table from White House and Democratic negotiators continue to link dependents to additional payments, with one proposal providing $1,000 for each dependent child and two different proposals expanding the definition of “dependent” to any child or adult you claim on your return, for $500 apiece.

Who qualifies as a dependent and how much Congress will earmark for them will remain open till Washington approves the next stimulus check.

Will I pay taxes on my stimulus payment?

No, a stimulus payment does not count as income and you won’t owe tax on it, the IRS has said

What if my AGI is different between my 2018 to 2019 tax returns?

If you filed your 2019 federal tax return before April 15, 2020, the IRS used your reported AGI to set the amount of your first payment. If you didn’t file in 2019 but did in 2018, that’s the year the IRS used. It’s likely a second check would follow the same protocol, if and when it happens.

What if I lost my job or got a new one since I filed taxes — do I qualify for a stimulus check?

If your financial situation changed after you filed your 2018 or 2019 tax return — for example, you received less income — you can claim that additional amount on your 2020 tax return when you file in 2021. You’ll likely need to take an extra step to claim your credit — the IRS will post more details closer to tax season 2020.

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The IRS uses your recent tax returns to calculate the size of your stimulus payment.


Angela Lang/CNET

Can my 2019 tax returns help me get a second check quicker?

If you filed taxes in 2018 or 2019 and included direct deposit information, the IRS will attempt to deposit your check in the bank account you provided on your tax return. If you normally receive your refund by check in the mail, the IRS provided a tool to let you use your banking info to get an electronic deposit. 

The deadline to use that tool expired mid-May, but the IRS would likely open it up again in the event a second stimulus check goes through.

How would stimulus payment this year affect how much I owe on next year’s taxes?

If you get a payment this year it won’t reduce your future tax refund or increase what you owe when you file your 2020 tax return next year. The payment also does not count as income to determine if you’re eligible for federal government assistance or benefit programs.

Will I have to return the money if I qualify for less with next year’s taxes?

You won’t be required to pay back a stimulus payment if, based on your 2020 tax returns, you no longer qualify for the amount you received.

Will the IRS take my stimulus money to cover taxes I owe?

If you owe federal taxes or have other federal debts, the IRS will not reduce your stimulus payment to cover those, with one exception we know of. If you owe past-due child support, the IRS will offset your payment to cover that expense.

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If you weren’t required to file a tax return, you can still qualify for a stimulus check.


Angela Lang/CNET

Can I claim stimulus money the IRS owes me on my 2020 tax return?

The IRS uses your 2019 tax return if you filed it (or your 2018 return if you didn’t file one in 2019) to set the amount of your payment. 

If a change to your financial situation was not reflected on your 2018 or 2019 tax return — the birth or adoption of a child, for example– you can claim that additional amount on your 2020 tax return when you file in 2021. This can include an additional $500 for a qualifying dependent that was owed, but not delivered, with the first check. The deadline to receive a missing payment this year for eligible dependents was Sept. 30.

I didn’t pay taxes. Do I still qualify for a payment?

If you were not required to file a 2018 or 2019 tax return because you were below income limits or you receive federal benefits such as Social Security, you could still qualify for a payment. The IRS recently reported that up to 9 million who fall into this nonfilers category may be owed a payment. You can use the IRS’ non-filers tool to see if you’re due a payment. 

The IRS extended the deadline from Oct. 15 to Nov. 21 to receive a coronavirus relief payment this year. After. Nov 21, you can claim it next year on your 2020 tax returns.

For more, here’s what you need to know about stimulus checks if you receive SSDI benefits, who else might be eligible for a second stimulus payment and what other benefits could be part of another relief package.



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