Are Stimulus Checks Taxable?

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The federal tax code states that "all income from whatever source" must be taxed unless specifically exempted.

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That seems to include money from the government. And, there is no specific way that stimulus check money is not included or excluded.

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There is a loophole in the law that lets you keep the third-round stimulus check money you got last year without having to pay taxes on it.

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According to the law, your third stimulus check isn't "income". Instead, it's just a tax credit paid out early. And tax credits are not subject to tax.

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Your stimulus check was based on the information from either your 2019 or 2020 tax return. The tax credit depends on what you say on your tax return for 2021.

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If you don't file a tax return for 2019 or 2020, or if your status changes from 2020 to 2021, the third stimulus check and the credit could differ.

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If the recovery rebate credit is more than your third stimulus check, your tax bill will go down and you might even get a refund. 

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If the amount of your stimulus check was more than the maximum credit, you get to keep the difference.

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Recovery rebate credit can only be claimed by submitting taxes. This applies even if you don't owe taxes. If eligible, file a tax return this year.

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