Why does it say that your stimulus check is an advance of your 2020 tax refund?

[Maraya1969]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Wait, what? <a href="https://t.co/I2cl2b1sTi">https://t.co/I2cl2b1sTi</a></p>— Rick Wilson (@TheRickWilson) <a href="

Link to tweet

?ref_src=twsrc%5Etfw">April 4, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

[Phoenix61]

1. That's incorrect. It's a tax credit. You don't

have to pay it back. It has nothing to do with your refund.

[Maraya1969]

3. I didn't say you had to pay it back. But it says on the photo that your tax

refund for 2020 might be lower since they are giving the money to you now.

I don't know. I can't believe the Democrats set it up like this.

[Phoenix61]

4. What I read is that it's a tax credit and then

I had to look up what that was. It says a tax credit comes off the taxes you have to pay, dollar for dollar. Sounds like a bookkeeping issue for them.

[Hoyt]

2. Not true. You do have to pay back all or a portion if you make $75K in 2020.

[Phoenix61]

5. $1200 for ind making up to &75,000

$2,500 for couple making up to $150,000. Amount reduced by $5 per $100 over the threshold amount.

[ProfessorGAC]

11. This

And the taxable portion is only based on the delta between what one made in 2019 & 2020.
As I told Hoyt yesterday, it's not very likely this will affect many people much.
Nobody is interviewing, so hiring to positions that would result in a big wage increase is unlikely, especially since the new position is unlikely to start until July, perhaps later!
So, while those provisions are there, hardly anybody who qualified for the payout is likely to owe anything. Maybe the single person who went from $73,000 to $75,500. The incremental payback on $500 is a pittance for anybody who had no job disruption.

[Princess Turandot]

6. I'll give this a try..

(Note: For the sake of simplicity, assume that this relates to someone who is entitled to receive (and keep) the full stimulus amount.)

The money that is being sent out relates to a federal action taken in 2020, which they need to put on the books, so to speak. They're going to do that through the income tax filing process for 2020, which actually takes place next year.

So, a tax credit will need to be shown for this item when you do your 2020 tax return, that you file in April 2021, because it was revenue that you received that year. But since you already received this specific cash in 2020, this new tax credit won't generate any more cash being sent to you in 2021 to settle up your 2020 tax return. They don't want people surprised by that. I think that's all this means.

FYI As far as I can tell from looking the tweet referenced, those screenshots are not coming from any federal government documentation. I saw at least 2 different sources being suggested in the tweet replies. So the paraphrasing by the source may be the problem.

[customerserviceguy]

7. A new refundable tax credit was created

Rather than wait for filing season in 2021, the government is sending it to you now.

[crickets]

8. Link to some info that might help.

https://www.democraticunderground.com/100213233711

[PoindexterOglethorpe]

9. I am extremely certain that is simply wrong.

This is money being sent to people, which while connected to how much they make, is NOT an advance on a tax refund. Whoever in the above piece who said that is simply wrong. Wrong, wrong, wrong.

[Cicada]

10. Section 6428 of the cares act. It's free money, no need to pay it back

The CARES ACT gives us all a tax credit for our tax year beginning in 2020. Some individuals actually have a tax year different from the calendar year. Some people chose a different tax year, such as children of rich people who elected a year starting, say Feb 1, when they first filed, at age 1 say. In the time of high inflation some did this to delay tax payments 11 months. It was a mistake. Explaining that to people, like bankers, was a huge pain, the tax delay wasn’t worth it. My firm which advised this was too smart by half, as they say.

But I digress. Most humans start Jan 1 so for the tax year 2020 we all get a tax credit created out of thin air of, say, $1200. The $1200 check we get is advance payment of that credit. When 2020 tax returns are filed you will have a tax credit if $1200 against any tax you owe. But you already got it, in the stimulus check, most likely but not always, so next year it shows as zero on your tax return line named magic tax credit out of thin air, or whatever. We don’t pay back anything in 2020. But a person who somehow didn’t get the 1200 they deserve in this year will get it next year on their 2020 tax return.

There are other rules so those making more than $75,000, $150,000 married joint, don’t get the check and won’t have a credit next year.

It’s free money, you don’t have to pay it back. Weird process but it’s free money, relax.