Got a Third Stimulus? Here’s How It’ll Affect Your Taxes

With a third round of stimulus payments well under way, many are wondering if the money they’ve received from the federal government will trigger a taxable event.

See: Your Third Stimulus Check Could Be Eligible for a Bonus Payment
Find: Will There Be a Fourth Stimulus Check? How Much Will It Be? All Your Questions Answered

“The simple answer is ‘no’,” Mark Steber, chief tax information officer at Jackson Hewitt, told CNBC’s Make It. “None of the stimulus payments are taxable.”

The IRS adds that individuals who qualify for a third stimulus payment are not required to pay back all or part of the payment.

Many who have received a third stimulus payment have now received in excess of $3,000. This form of income is tax-free and a “gift” from the federal government, so you will not include the stimulus payment in your gross income on your 2021 income return, and the payment “will not reduce your refund or increase the amount you owe,” the IRS states.

See: 13 States Won’t Let You Claim Biden’s $10,200 Unemployment Tax Break
Find: Unhoused People May Not Have Access to Stimulus Checks — Here’s How They Can Get It

You might need to be careful on your 2021 tax returns when you file in 2022, though. According to the IRS, “While you are not required to report the third payment on your 2021 return, you may need that information to determine whether you are eligible to claim a 2021 Recovery Rebate Credit on your 2021 tax return filed next year.” The stimulus payment is an advance on that credit. If you don’t receive the payment you’re eligible for or don’t receive the maximum amount you could have this year, you’ll claim the rebate when you file your 2021 tax return.

Because you don’t have to report it on your tax return, a 2021 stimulus payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.

More From GOBankingRates

  • Money’s Most Influential: Where Do Americans Get Their Financial Advice?

  • Don’t Miss Out on Nominating Your Favorite Small Business To Be Featured on GOBankingRates — Ends May 31

  • ‘Rich Dad Poor Dad’ Author Robert Kiyosaki: You Should Never Say ‘I Can’t Afford That’

  • Everything You Need To Know About Taxes This Year

Last updated: April 14, 2021

This article originally appeared on Got a Third Stimulus? Here’s How It’ll Affect Your Taxes

Source: Read Full Article