Tax Rascal

Tax Q&A: Is Last Year’s Stimulus Taken Out of This Year’s Taxes?

Categories: Uncategorized
Tax Q&A: Is Last Year’s Stimulus Taken Out of This Year’s Taxes?

It’s a common question in online tax forums: was last year’s stimulus check a gift? Or was it a loan? When the stimulus was passed, the economic situation looked bad. Now, it looks catastrophic. Getting an extra $600 then was a nice boost, but paying back $300 now (or more, with interest) could be awful.

The good news is that nobody is going to ask you to return your stimulus payment, and the cost of it won’t be deducted from your next tax refund. But that’s only because of how fungible money is, sometimes: the cost — $300 per taxpayer, plus $300 per dependent, less some exceptions for high-income earners, but plus some other tax incentives — comes out to $152 billion.

So who pays for it, and how? Obviously, taxpayers — the same people getting the checks — are the ones footing the bill. Of course, that obscures the real answer. Even though the bill offered money to each taxpayer, there’s little chance that each one will pay back the same share.

Right now, the top 1% of earners pay up to 31% of all taxes, depending on how you run the numbers. And since a large part of President Obama’s economic policy involves cutting taxes for people with low incomes, that number is likely to go up.

So the real, complex answer to the original question is No, you probably won’t have to pay for last year’s stimulus on this year’s taxes. But if you do have to pay, you’ll be paying many, many times over — and you shouldn’t expect it to be the last stimulus program you pay for, either.


3 Responses to “Tax Q&A: Is Last Year’s Stimulus Taken Out of This Year’s Taxes?”

  1. Zahid Says:

    Thanks for that input there…. As I prepare taxes, i found out that this year there is a question that asks if a person received any payments last year, the so called “Recovery Rebate Credit” which has known as Stimulus Payment last year. If I put in for eg. MFJ received $600, it says that not eligible for anything more from the IRS. If I put in 0, then it shows me the amount of $600.

    Not having received the stimulus payment increases the refund and if you received it, doesn’t make a difference. Keep all the statistics aside, I still think it is money in taxpayers pocket.

  2. David Says:

    I filed on troubo tax it’s making me pay taxes on last years stimuluis is this correct?

  3. Tax Rascal Says:

    David: it’s a little complicated. Actually, the Turbo Tax stimulus calculation works like this: they assume that you’ll get it, and then ask you if you already got it. People who didn’t get the stimulus are entitled to a payment, but most people already got it.

    So they overestimate what you’re getting back, and then fix their estimate. It’s a little deceptive, but it doesn’t change your final result.

Leave a Reply


Featured & Popular Articles