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However, some individuals may not receive the full $ 600 payment when they repay taxes, despite the fact that the IRS has promised not to use the economic impact payments to offset any government debt.
The CARES bill, passed in March, allowed cash payments of up to $ 1,200 for adults ($ 2,400 for couples filing together) and $ 500 per child under the age of 17. The $ 900 billion coronavirus relief package approved in late December approved additional payments of up to $ 600 per adult ($ 1,200 for couples) and up to $ 600 for each qualified child under the age of 17.
Under the CARES Act, the IRS could only offset the stimulus payment when individuals owed child support back. With the latest relief package – known as the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 – that provision has been removed so that people can get the money regardless of what debt they owe.
The problem, however, is that the cash payments are actually a recovery rebate credit for 2020 tax returns that has been approved to be paid in two upfront payments in 2020 and early 2021. If you apply for this credit on your 2020 tax return, once the tax season starts on February 12th, the IRS will include it on your entire tax return, including liabilities.
That is, if you received $ 600 in stimulus check credit but owe $ 500, you will receive a payment of $ 100.
“It’s a tax credit on your 2020 income tax,” the IRS said. “In general, this credit increases the amount of your tax refund or decreases the amount of tax you owe.”
The IRS opened on Friday Free file, free online tax preparation software for taxpayers earning less than $ 72,000 to prepare and file their income tax returns. Americans can also claim their stimulus testing with the tool.
“For 2021, eligible taxpayers who did not receive the full amount can claim it as a refund credit when filing their 2020 tax return,” the IRS said. “Use IRS Free File to Submit and Claim This Important Benefit.”