The One Mistake Stimulus Check Recipients Are Making When Filing Their Taxes
This is a tax season unlike any other. With most (but not all!) states extending their deadlines until May, taxpayers have a little extra time to get things in order. But there are still plenty of landmines and unprecedented variables like stimulus checks to navigate when filing your 2020 taxes.
One question many taxpayers are asking: How do I document my stimulus check on my 2020 tax return?
Paying Taxes on Your Stimulus Check
In short, if you received a stimulus check, you don’t have to do anything. Zip, nada, zilch. The IRS sent the check or made the bank transfer, and they know if it landed in your bank account. And you certainly don’t have to pay taxes on it.
Your stimmy is not, in the eyes of the IRS, “income.” But that hasn’t stopped people from fumbling an easy touchdown.
The One Stimulus Check Mistake You Can Make On Your Taxes
As CNBC reports, people are, in fact, counting their stimulus checks as income. And that’s causing problems:
If you accidentally listed your checks as income, you will pay more in taxes when filing your return and will eventually have to receive a refund from the IRS. There’s no guarantee the IRS will catch your mistake for you when processing your 2020 return, Steber says.
Assuming these taxpayers realize their mistake, there are steps they can take to get that refund. But what a headache. And as we know, time is money.
Just think of the opportunity cost of letting that cash sit with the IRS when it could be used to save for retirement, invest in your favorite stocks, or pay off student loans.
Ouch.