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