Stimulus Loan Against Future Taxes

The first round of stimulus checks was technically a rebate based on your latest filings with the irs.

Stimulus loan against future taxes. The stimulus is an advance of a refundable tax credit on your 2020 taxes. In other words the bill created a refundable tax credit and the irs is paying out the amount of that tax credit to eligible taxpayer now. With a second round of checks in the works here s how the money will affect your tax returns.

In fact it could increase how much you get back. What is an advance tax credit. The stimulus check will not lower how much you get back in a refund next year.

The internal revenue service says the payment will not reduce your. If you owe 1 500 in federal income taxes and you get a 1 000 tax credit your tax bill sinks to 500. Refundable tax credits can.

The stimulus checks are technically an advance of a. Uncle sam is about to send most americans a check of up to 1 200 an out of the ordinary move that s leading some people to wonder if and how this seemingly free money will affect their tax refund next year. Seniors who rely on social security and don t file tax returns will still be eligible for the stimulus checks.

If you need ideas on what to do with your money we have some tips for you. 6 ways to spend your 600 check and a future third payment too. A garden variety tax credit can reduce your tax bill to zero but it can t turn a tax bill into a tax refund.

Social media posts falsely claim that federal payments from the covid 19 stimulus package could reduce taxpayers future refunds. Since the irs does not have your 2020 tax year information it will use a previous year s information to calculate the amount. These stimulus checks which are part of the multi trillion dollar stimulus package passed in march and could arrive in taxpayer bank accounts as soon as april 15 are intended to ease financial hardships created by the coronavirus.