Top Five Myths about IRS Stimulus Payments
We've received a number of inquiries from our readers about the COVID-19 economic impact payments (aka stimulus payments) since we originally posted this blog. Within those inquiries, we’re noticing a few common myths that have arisen, so we decided to post a follow-up article to clear up some of these myths. If you haven’t read the original blog, make sure to take a look if you don’t find the answers to your questions below.
Myth #1: I will have to pay taxes on the money I receive.
This is not true. The IRS has designated the stimulus funds as tax credits, not taxable income. Rest assured that you can use this money in whatever way you want, and you won't have to pay any tax on it in 2020.
Myth #2: I will have to pay back the stimulus money.
Also, not true. You won't have to pay back the money you receive from the IRS next tax season, assuming you filed correctly in 2018 or 2019. In-fact, you may actually receive more money back when you file your 2020 taxes according to the Tax Foundation! Even if your adjusted gross income is higher in 2020 than it was in 2018 or 2019, you still won't have to pay back the stimulus money.
Myth #3: Because the IRS sent me a larger check than I deserved, I will have to pay back the extra.
If you receive more money than you were supposed to get, the IRS will not ask for the money back. If you receive a call asking to pay back the difference, it is likely a scam according to the Federal Trade Commission. The IRS will NOT call, text, or email you to collect personal information.
Myth #4: Time has run out on filing for a stimulus payment.
If you have not filed a return with the IRS for whatever reason, you CAN file for stimulus funds. Head to the Economic Impact Payment web page on the IRS website and scroll down. Click the button that says "Non-filers: Enter Payment Info Here." You'll be able to enter your information and receive your stimulus money, just like those who filed in 2018 or 2019.
Myth #5: If my tax situation has changed since I filed my taxes, there’s nothing I can do about it.
If you have not filed your 2019 taxes yet, and your tax situation has changed since you filed your 2018 taxes (one common change is the birth of a child), the amount of stimulus money you receive will not reflect your changed tax situation until you have filed your 2019 return. If you file your 2019 taxes after you have received your stimulus money, you may have to wait until you file your 2020 taxes to receive a corrected tax credit based on your current tax situation. The IRS is still working to clarify grey areas like these. Keep an eye on the Economic Impact Payment web page on the IRS website for updated information.
Those are the common myths and there’s one final frequent question that I don’t have a clear answer for. If you receive your tax refund on a prepaid card, such as an H&R Block Emerald card, it's unclear whether money will be deposited on your card. The best advice I can give is that you head to the Economic Impact Payment web page on the IRS website and click the button that says "Get My Payment." There, you'll be able to track your stimulus and update your information if necessary.
The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of VSECU.
About Oliver Ames
Oliver is VSECU's social media strategist and spends most of his day engaging with members through our Facebook, LinkedIn, Twitter, and Instagram profiles. He has a background in science education, non-profit fundraising, business communication, media production, and membership-based organizations. When not at work, Oliver spends much of his time with his wife and their little dog Butterscotch at their home in Montpelier.