The Economic Impact Payments, approved by Congress in March and December 2020, were meant to stimulate the economy, but many are wondering — how does this affect my taxes?
The great news is that the EIPs are not taxable and not reported as income. However, you will need to provide the amounts received when filing your 2020 taxes. EIP recipients should have received documents confirming payment amounts, an IRS Notice 1444 for the first payment and 1444-B for the second payment. If you did not receive these forms, verify the deposit amounts with your bank before filing your taxes. If you did not receive one or both of the EIPs, the IRS may allow any missed payments to be included in your 2020 tax return refund in the form of the Recovery Rebate Credit.
As a reminder, the EIP amounts vary by filing and dependent status, as well as income limits. Generally, for the first EIP, individuals received up to $1,200 each and $500 for each qualifying child. The second payment was up to $600 for individuals and $600 for qualifying children. Income phase outs begin at $150,000 for joint filers, $112,500 for head of household, and $75,000 for all others. Visit IRS.gov for more information on income limits, payment amounts, and eligibility requirements.
Had a baby in 2020? Congrats! Not only did you gain a new bundle of joy, but babies born by Dec. 31, 2020 may make the taxpayer eligible for the Recovery Rebate Credit. This amount can be included in your 2020 tax return refund.
For more information on EIPs go to: https://www.irs.gov/coronavirus/economic-impact-payment-information-center. As a reminder, the Ramstein Tax Center is open and providing services virtually. To determine if you are eligible for this free service and to make an appointment call the Tax Center at DSN 480-1040 or email the office at 86AW.JA.Ramsteintaxcenter@us.af.mil.