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If you’re worried about owing taxes because of your stimulus money, here’s what you need to know.
Key points
- There’s a limited number of situations where you need to pay back stimulus money.
- The IRS has contacted tax filers who miscalculated when claiming the Recovery Rebate Credit.
- Overpayments on the Child Tax Credit could also result in an expensive tax bill.
Since the IRS first sent out stimulus checks, many have wondered how it will affect their taxes. Stimulus money is technically a tax credit, which means it doesn’t count as income and normally won’t raise your tax bill.
If you received an overpayment, that’s a different story, and you may need to repay that on your taxes. However, the rules vary on this. To help you know what to expect, we’re going to cover when you will and won’t have a bigger tax bill because of stimulus money.
You won’t need to repay stimulus money if your income increased
Probably the most common worry is that you’re going to need to pay back stimulus money because your income was too high. The stimulus checks all had income limits attached, and the IRS calculated how much to send based on your most recent tax returns at the time.
For example,…
