Taxability Of Stimulus Check

A guest post from Joey Reeve, who is the founder and CEO of Universal CPA Review, a New York City based EdTech company. Universal is known for its application of visual learning techniques and adaptive learning technologies in helping candidates pass the CPA exam. He is responsible for overseeing product development and go-to-market strategies. You can find Joey on LinkedIn or by visiting Universal CPA Review’s website. 

Topic: Tax reporting requirements for received stimulus checks

Title: What Are Covid Stimulus Checks and Are They Reportable on my Tax Return?:

It’s that time of year again, no the McRib is unfortunately not back at McDonalds until December. I am instead talking about the time to file our taxes to the good old IRS! When it comes to the government distributed stimulus checks, you all likely have the same question: “Do I have to pay tax on my received stimulus check?” 

The short answer is no, but let’s start with a quick recap on what the stimulus check even is and how much has been distributed to date. 

While we think of this payment as the stimulus check, or as my beloved grandmother calls it, “her stimi”, the more formal name of these checks are referred to as Economic Impact Payments (EIPs). So far, there have been three stimulus check’s distributed to qualifying americans. 

• First check: $1,200 check + additional $500 for every qualifying childa
• Second check: $600 check 
• Third check: $1,400 ($2,800 for married filers)

Who Qualified for Stimulus Checks: 

In order to receive a stimulus check, all you basically need to do is prove that you are a living and taxpaying American citizen that meets the income eligibility requirements. The Internal Revenue Service (IRS) states that eligibility for the third Economic Impact Payment will be considered if the taxpayer’s adjusted gross income (AGI) is not more than: 

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 for eligible individuals using any other filing status

So basically, what this means is that if your AGI is greater than the above amounts, the amount of stimulus that you will be eligible to receive will begin to reduce and will be completely disqualified from receiving payments if their AGI is at least: 

• $160,000 if married and filing a joint return or if filing as a qualifying widow or widower
• $120,000 if filing as head of household
• $80,000 for eligible individuals using any other filing status

Remember, the more money you make, the less flexibility the IRS will have with you. After all, for them, the name of the game will always be maximizing tax revenues. 

Do I have to pay tax on my stimulus check? 

You do not. Like all received stimulus checks, the most recent stimulus check will also be tax-exempt. There are various resources that can be used to further understand these details. If you’re a visual learner, Universal CPA Review does a good job of teaching taxation concepts.