News Talk 94.1/AM 1600 Where The Upper Cumberland Talks
As COVID-19 stimulus checks arrive in local accounts, confusion surrounding the payment’s affect on taxes continues.
Certified Public Accountant Jennifer Phipps said, despite rumors to the contrary, the stimulus money is not directly connected to your tax returns.
“The reason why I think people are thinking it is something related to your future income taxes is because this is actually termed as a credit,” Phipps said. “It’s a credit people will be able to take on their 2020 filings if they don’t receive the stimulus payments in advance this year.”
Phipps said receiving the stimulus payment will not affect your return next year.
“It will not reduce next year’s refund,” Phipps said. “It does not have to be paid back. The difference is that there is going to be an extra credit added on to the 2020 tax returns for those taxpayers that did not get their advance stimulus payment.”
Congress passed the $2.2 trillion dollar stimulus package on March 27. It includes $1,200 dollar payments to those making under $75,000 dollar a year, along with $500 dollars for children. That credit, Phipps said, may actually benefit taxpayers next year.
“What they may see is that they are getting more back next year,” Phipps said. “It’s because the ones who receive the stimulus payments are getting their credit in advance. They are getting it this year instead of next year on a tax return.”
Phipps said it is common for confusion to surround stimulus packages
“Especially because of the quick turnaround and the need to especially get some assistance out to quickly,” Phipps said, “we were seeing floods of anticipated language and publications that were trying to help people understand might be in the final language, and then social media, of course. Confusion is very common whenever there is any kind of legislative changes, especially when it relates to tax payers taxes.”
Phipps said she is already hearing reports of scammers surrounding the payments.
“What we’re hearing is once a taxpayer receives a stimulus payment, they may receive a text message, phone call, or email stating it’s from the IRS,” Phipps said. “It’s 100 percent not. It’s a scam, so we want to warn taxpayers to not respond back if they are told the IRS is communicating with them via text message, phone call, or email. The IRS will use the mail.”
Phipps said to receive accurate information, you can go to IRS.gov or contact your tax preparer.
