Stimulus checks won't be taxed, but unemployment benefits will be

NOW. MY WIFE GOT HERS EVERYBODY. I KNEW GOT THEIRS. I HAVE I RECEIVED NOTHING LARS. OLSON IS FRUSTRATED ALMOST A MONTH AFTER AMERICANS STARTED RECEIVING THE SECOND ROUND OF STIMULUS PAYMENTS. THERE’S STILL NO SIGN OF HIS SIX HUNDRED DOLLAR CHECK THE GET MY PAYMENT. FROM THE IRS SHOWS HIS FIRST STIMULUS CHECK LAST SPRING DEPOSITED WITH NO PROBLEMS. BUT UNDER THE SECOND IT SAYS STATUS NOT AVAILABLE. SO NOW IT’S TRAPPED BECAUSE THAT’S $600 DOESN’T COME IN AND SAW LIKE, I’M LOOKING FOR A HANDOUT, BUT I WAS EXPECTING ANYTHING AND CERTAINLY COULD HELP US. IT’S FAR FROM IDEAL GIVEN HIS WIFE WAS LAID OFF OLSON DID FILE HIS TAXES USING THE SOFTWARE TAX ACT LAST YEAR, WHICH MAY HAVE LED TO THE IRS MIX-UP, BUT HE SAYS HIS BANK INFORMATION HAS NOT CHANGED MY BANK IN THE LAST FIVE YEARS AND THE BANK I HAD BEFORE THAT I’VE HAD I STILL HAVE EITHER WAY OLSON AND ANY AMERICAN OWED A STIMULUS PAYMENT WHO DID NOT GET ONE OR WHO MAY NOT HAVE RECEIVED THE CORRECT AMOUNT WILL GET IT THIS SPRING WHEN THEY FILED THEIR 2020 TAXES THE NEW 1040 FORM RELEASED BY THE IRS HAS A NEW LINE CALLED THE RECOVERY REBATE CREDIT. IT’LL EITHER REDUCE THE AMOUNT OF TAX YOU OWE OR INCREASE YOUR REFUND IF YOU’RE OLD. ONE OR BOTH STIMULUS PAYMENTS. HERE’S HOW IT WILL WORK. LET’S SAY YOUR DO $1,000 TAX REFUND THIS YEAR, BUT YOU DID NOT GET EITHER STIMULUS PAYMENT WHICH ADDED UP TO 1,800 BUCKS. THAT’LL INCREASE YOUR REFUND FROM A THOUSAND TO TWENTY EIGHT HUNDRED DOLLARS IF YOU OWE A THOUSAND BUCKS IN TAXES, THE 1800 WILL TURN THAT INTO AN 800 DOLLAR REFUND. AGAIN. THIS IS ONLY FOR PEOPLE WHO QUALIFY FOR THE STIMULUS PAYMENTS AND DID NOT GET THEM. NOW THIS WILL GREATLY HELP PEOPLE WHO MAY HAVE LOST THEIR JOB OVER THE PAST YEAR, BUT DID NOT GET STIMULUS CHECKS BECAUSE REMEMBER THE IRS INITIALLY ESTIMATED THOSE PAYMENTS ON 2018 OR 2019 INCOME BUT AT THE END OF THIS THE ONLY INCOME THAT MATTERS HERE IS THE MONEY ACTUALLY MADE IN 2020. AND BY THE

The federal government has sent billions of dollars directly to Americans to help them cope with the economic fallout of the pandemic, but now that tax season is approaching, some people could find they owe some of the money back.It depends on the type of benefit. The two rounds of direct stimulus payments that were sent to millions of Americans are tax-free. But the special pandemic unemployment benefits are treated like income and could increase your 2020 tax bill if money hasn't already been withheld for taxes.But some people might actually receive more stimulus money when they file their 2020 tax returns. Because stimulus checks were calculated using 2018 or 2019 income, those who lost their job in 2020 or otherwise saw their income fall from the year before could be due extra cash — which they can claim on their return.Here's what you need to know:Stimulus checks are tax-free More than 160 million Americans received a stimulus payment worth up to $1,200, or double for couples, last year. A second round of payments began going out in January, worth up to $600 per individual, including children younger than 17.The amounts are calculated on a sliding scale and start phasing out for individuals with adjusted gross incomes of more than $75,000, heads of household who earn more than $112,500, and married couples filing jointly earning more than $150,000.The money isn't taxed, because the payments were technically an advance on a 2020 tax credit.You could be due more stimulus moneyThe 2020 tax return will allow people to claim more money if they didn't receive the full amount they were due.The stimulus payments were based on either 2018 or 2019 income. That means people who experienced a reduction in pay or lost their job during the pandemic are likely owed more money. (Those whose income increased in 2020 will not have to pay back any money, though.)The Internal Revenue Service is adding a Recovery Rebate Credit Worksheet to the 2020 tax return forms to help taxpayers determine if they are eligible for more money.Those who haven't gotten their second check because they changed their bank account or address since the first one was sent can also claim the money on their tax return.What to do if you didn't get a stimulus paymentThere are an estimated 8 million people who may have missed out on the stimulus payments altogether because they aren't normally required to file taxes and the Internal Revenue Service had no way of reaching them. An online portal that allowed them to input their bank account information is not longer available — but they can file a 2020 return to receive the money.President Joe Biden has asked the Treasury Department to take more aggressive action to reach these people. Are more stimulus checks on the way?Biden is calling on Congress to approve another round of $1,400 payments, as part of a sweeping $1.9 trillion relief plan that would also extend unemployment benefits, provide more money for small businesses, and reinstate emergency paid leave.There is support for another round of checks from lawmakers in both parties, but it's not certain Biden has all the votes he needs. Democratic Sen. Joe Manchin of West Virginia has said he would prefer additional payments to be more targeted, to make sure the money goes to those hit the hardest and excluding people who may not need the money.Congress could take steps to consider Biden's economic relief package as soon as next week. Tax is owed on unemployment benefitsUnlike the stimulus payments, there is tax on unemployment benefits.Congress has increased weekly payments by $300 through mid-March, on top of state benefits. Last year, the unemployed received a weekly boost of $600 for four months. Lawmakers also expanded unemployment benefits to more Americans, including the self-employed, independent contractors, and gig workers.Like state unemployment benefits, the federal payments are subject to income tax. Some people may have chosen to withhold taxes from the benefit when they enrolled for unemployment with their state agency, but others may owe the full tax amount when they file their 2020 return.

It depends on the type of benefit. The two rounds of direct stimulus payments that were sent to millions of Americans are tax-free. But the special pandemic unemployment benefits are treated like income and could increase your 2020 tax bill if money hasn't already been withheld for taxes.

But some people might actually receive more stimulus money when they file their 2020 tax returns. Because stimulus checks were calculated using 2018 or 2019 income, those who lost their job in 2020 or otherwise saw their income fall from the year before could be due extra cash — which they can claim on their return.

Here's what you need to know:

Stimulus checks are tax-free

More than 160 million Americans received a stimulus payment worth up to $1,200, or double for couples, last year. A second round of payments began going out in January, worth up to $600 per individual, including children younger than 17.

The amounts are calculated on a sliding scale and start phasing out for individuals with adjusted gross incomes of more than $75,000, heads of household who earn more than $112,500, and married couples filing jointly earning more than $150,000.

The money isn't taxed, because the payments were technically an advance on a .

You could be due more stimulus money

The 2020 tax return will allow people to claim more money if they didn't receive the full amount they were due.

The stimulus payments were based on either 2018 or 2019 income. That means people who experienced a reduction in pay or lost their job during the pandemic are likely owed more money. (Those whose income increased in 2020 will not have to pay back any money, though.)

The Internal Revenue Service is adding a Recovery Rebate Credit Worksheet to the 2020 tax return forms to help taxpayers determine if they are eligible for more money.

Those who haven't gotten their second check because they changed their bank account or address since the first one was sent can also claim the money on their tax return.

What to do if you didn't get a stimulus payment

There are an estimated 8 million people who may have missed out on the stimulus payments altogether because they aren't normally required to file taxes and the Internal Revenue Service had no way of reaching them. An online portal that allowed them to input their bank account information is not longer available — but they can file a 2020 return to receive the money.

President Joe Biden has asked the Treasury Department to take more aggressive action to reach these people.

Are more stimulus checks on the way?

Biden is calling on Congress to approve another round of $1,400 payments, as part of a sweeping $1.9 trillion relief plan that would also extend unemployment benefits, provide more money for small businesses, and reinstate emergency paid leave.

There is support for another round of checks from lawmakers in both parties, but it's not certain Biden has all the votes he needs. Democratic Sen. Joe Manchin of West Virginia has said he would prefer additional payments to be more targeted, to make sure the money goes to those hit the hardest and excluding people who may not need the money.

Congress could take steps to consider Biden's economic relief package as soon as next week.

Tax is owed on unemployment benefits

Unlike the stimulus payments, there is tax on unemployment benefits.

Congress has increased weekly payments by $300 through mid-March, on top of state benefits. Last year, the unemployed received a weekly boost of $600 for four months. Lawmakers also expanded unemployment benefits to more Americans, including the self-employed, independent contractors, and gig workers.

Like state unemployment benefits, the federal payments are subject to income tax. Some people may have chosen to withhold taxes from the benefit when they enrolled for unemployment with their state agency, but others may owe the full tax amount when they file their 2020 return.

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