Are stimulus checks taxable? | The US sun

TAX season is in the rearview mirror, but many Americans have requested an extension that allows them to electronically file a 2021 tax return by October 17.

And many are wondering whether the stimulus checks received over the past year should be taxed.

In 2021, millions of Americans received a stimulus check worth up to $1,400.

Millions of Americans received stimulus checks in 2021

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Millions of Americans received stimulus checks in 2021

That was the third round of stimulus issued amid the ongoing Covid pandemic.

The payment was in addition to child tax credits, which began in July 2021 and offer qualifying parents up to $300 per month per child.

A few individual states also provided grants to residents, and additional states introduced grant-refund programs this year to offset rising inflation.

Most recently, states like Connecticut, Hawaii and New Mexico have offered one-time payments that will be issued sometime in August.

Some have put their surplus to good use, others are offering the payments as tax refunds.

Also, for example, the second round of California’s Golden State Stimulus program brought residents 8.1 million payments worth more than $5.8 billion, a spokesman for the California Franchise Tax Board told The Sun.

Below we explain whether these stimulus checks are taxable if you’re still preparing to file a tax return in 2022.

Stimulus checks in the third round

The third round of stimulus checks was approved by President Joe Biden as part of his March 2021 American bailout plan.

These payments were similar to the first two rounds in that they act as tax prepayments.

This payment is not part of your gross income and is therefore not taxable.

It also won’t affect any amount you may owe or reduce your tax refund when filing your 2021 taxes.

The third stimulus check was issued as a tax credit for reimbursement in advance for the 2021 tax year.

If you didn’t get the third payment, or if your check was lower than it should have been based on your income, you could receive the amount owed when you file your 2021 taxes.

If you received more than you should because of a change in income or other circumstances, you do not have to repay the state.

It’s also important to note that these stimulus checks cannot be used by the IRS to pay federal debt, child support, federal taxes, or state income taxes.

The IRS states on its website that you don’t have to report the third stimulus check on your 2021 tax return.

However, the information may be helpful in determining if you are eligible to claim a 2021 rebate credit on your tax return.

Payment of child allowance

If you received child tax credit payments in 2021, this is technically an advance on your child tax credit for tax year 2021.

These payments cannot be claimed as income and are not taxable.

However, there is a key difference between government stimulus checks and child tax credit payments.

If your total child tax credit prepayment amount is greater than what you can claim on your 2021 tax return, you must pay back the amount owed.

That’s because the payments were based on the IRS’s estimate of your 2021 child tax credit amount.

You can repay the excess during the 2022 tax return season if you file a 2021 return.

Golden State Stimulus Taxation

While individual states that have offered stimulus checks may have different rules, the California Franchise Tax Board confirms on its website that the Golden State stimulus payments are not subject to state tax.

As with federal stimulus payments, the Golden State stimulus is not eligible for income.

Therefore, it cannot be claimed in an income tax return.

We explain which states have been granted a tax return extension by the IRS in 2022.

We also explain why your tax refund may be lower in 2022.

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https://www.the-sun.com/money/4528844/are-stimulus-checks-taxable-irs-tax-season/ Are stimulus checks taxable? | The US sun

CELINE CASTRONUOVO

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