If you’re owed but have yet to receive a second stimulus payment—the widely mocked $600 that started to go out at the end of December—then there’s one thing you can do to get your money: file your taxes ASAP. Any as yet unpaid stimulus payments — whether it be the $600 check from January or the upcoming $1,400 check — are tied to your most recent tax returns. That’s especially important if, say, you earned less in 2020 than you did in 2019.
And that means that filing early to get your tax return faster also means getting your missing stimulus payment(s) faster. And if you owe taxes to the government, the stimulus it owes you could dent or even wipe out that deficit.
Here’s what you need to know about the relationship between taxes and stimulus payments—known to the IRS as the Recovery Rebate Credit—including if you are owed more money and how to get it.
Why would someone be entitled to the Recovery Rebate Credit?
There are a few different reasons someone might be in line for a recovery rebate credit. The most common are:
- You didn’t receive the full economic impact payment(s) you were owed.
- You had a kid or got married in 2020.
- Your income in 2020 was lower than it was in 2019. In many cases, that can change how much of a stimulus payment you’re entitled to get.
How do you know if you can claim the Recovery Rebate Credit?
For both of the stimulus payments that have already gone out, Americans with 2019 incomes under $75,000 should have received $1,200 and $600, respectively. The amount of each payment decreased from those maximums by $50 for every $1,000 over $75,000. For example, someone who made $90,000 in 2019 should have received $450 in the first round and $0 in the second. (As always, you can double these amounts for joint filers.)
Additionally, those receiving a stimulus payment received $500 for each dependent child 16 or younger in the first round and $600 for each dependent child 17 or younger in the second round.
Once you calculate how much you were owed for each round of payments, you can check your IRS account to confirm how much you actually received. If you didn’t receive the full amount, you can write in the difference in line 30 on form 1040 (or 1040-SR, for senior citizens). That amount will translate directly into a lower tax bill or greater tax return.
Why else should you file your taxes early?
Filing is also a great chance to set up a direct deposit with the IRS, which means any refund you are due will simply appear in your bank account. And assuming that the Biden administration passes a third stimulus in the near future, you’ll get that more quickly too.
And speaking of the third stimulus payment, the IRS is calculating how much yours will be based on the most recent taxes you filed. So if you file your taxes ASAP, the IRS will use the lower income amount from 2020, which can mean you receive a greater stimulus payment (and that you won’t have to go through this process again in a year).
I made more money in 2020. Do I have to pay back my stimulus?
Nope, that money is yours.