Economic Income Payment FAQ:
A1. Maybe. While, you are not required to report the third payment on your 2021 return, you may need that information to determine whether you are eligible to claim a 2021 Recovery Rebate Credit on your 2021 tax return filed next year. This information will help you if you don’t receive a third payment or don’t receive the maximum amount this year, because you may be eligible to claim the 2021 Recovery Rebate Credit when you file your 2021 tax return.
Q2. Is the Payment includible in my gross income? (updated April 24, 2020)
A2. No, the Third Economic Impact Payment is not includible in your gross income. Therefore, you will not include the third payment in your taxable income on your 2021 Federal income tax return or pay income tax on the third payment. It will not reduce your refund or increase the amount you owe when you file your 2021 Federal income tax return in 2022.
A 2021 payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.
A3. No, there is no provision in the law that would require individuals who qualify for a Third Economic Impact Payment or an additional payment based on their 2020 or 2019 information, to pay back all or part of the payment if, based on the information reported on their 2021 tax returns, they would have qualified for a lesser amount.
For example, you received $500 for your child who, based on your 2018 or 2019 tax return, met the qualifying child requirements. That child turned 17 in 2020 and no longer meets the qualifying child requirements. You will not be required to pay back the $500.
Or, for example, you received $500 for your child whom you claimed on your 2018 or 2019 tax return. You do not claim the child on your 2020 tax return because the child’s other parent claims the child. You will not be required to pay back the $500 even if the child’s other parent claims $500 for the same child on his or her 2020 tax return.
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