How the Stimulus Payment will Affect YOUR 2021 Return

  • Did you get a stimulus check for you, your spouse, your children, or another dependent?
  • Did you receive a partial stimulus check?
  • You didn’t receive a stimulus check because you made too much?

In 2020, Covid-19 came to our home fronts bringing with it Governmental and Societal changes. As a result of the pandemic, financial relief was sent to many Americans. This relief was in the form of a stimulus payment via direct deposit, check, or social security/disability.

If, in your most recent filing year (2018 or 2019), you made under:

  • $150,000 for married couples filing joint returns
  • $112,500 for head of household filers and
  • $75,000 for all other eligible individuals

You were eligible for a full stimulus payment of $1,200 filing single or $2,400 if filing married joint, and an additional $500 for all eligible dependents age 16 or younger.

If you made over these amounts, your stimulus will be reduced by 5%  for the amount your Adjusted Gross Income is above these amounts.

Also, eligible retirees and recipients of Social Security retirement, survivor, or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and VA Compensation and Pension (C&P), who do not file a tax return, will receive a $1,200 payment.

These stimulus payments do NOT count as income, and will not be reported on your income when you file taxes.

If you received the full amount you were entitled to in 2020, you will receive a “credit” in 2021, but it will be offset by your received payment, equaling $0 more stimulus dollars added to your refund.

If you chose not to accept the stimulus payment in 2020, or you never received it due to error, bad address, or the like, you can claim the stimulus credit in 2021, and the stimulus WILL be included in your refund amount.

Also, if you were a dependent in 2019, over the age of 16, and didn’t receive the stimulus in 2020, you can file a tax return for the 2020 year, and possibly receive a stimulus payment on your OWN tax return, but you cannot be claimed as a dependent for year 2020.

If you received a partial stimulus payment because you made too much on your most recent tax return, but you made less in 2020, you may be entitled to the remainder of the stimulus, and can claim this in 2021 for your 2020 return, resulting in a refund or less tax owed.

If you made too much in 2019 to receive any stimulus payment in 2020, but made less in 2020, and were below the wage cutoff above, you will receive a stimulus credit in 2021, reducing your tax owed, or causing a refund to you.

An example:

Steph is a married mother of 3, ages 3, 7, and 17. In 2019 the married couple made $175,000 for the year. They did NOT receive a stimulus check for themselves, or their children in 2020. In February of 2020, Steph’s husband lost his job due to Covid-19 closures, making their income for 2020 only $92,000.
When the married couple have their taxes prepped in 2021, they realize they will receive a credit of $3,400 on their return. Because their 2020 income was below the cutoff of $150,000, they get to receive the full stimulus in 2021, despite their 2019 Adjusted Gross Income of $175,000. But, as you noticed, they only received the additional dependent stimulus of $1,000 ($500/dependent) instead of $1,500 for ALL 3 kids. This is because their eldest child is over the age of 16 in 2020.

If you have questions, concerns, or just want to know what will happen to your taxes for year 2020, contact, Liz Doerring Tax & Accounting, we are always here for your tax and bookkeeping needs!

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All other times by appointment.

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