Stimulus Is Tax Credit Advance

But the stimulus check is the other kind of tax credit.

Stimulus is tax credit advance. Some tax credits reduce your overall tax bill the more credits you. A refundable tax credit like the american opportunity tax credit or earned income tax credit. However unlike other credits such as the child tax credit or earned income tax credit the government distributed these payments ahead of tax season instead of making taxpayers wait until january.

The stimulus payment is a federal tax credit for tax year 2020. Though stimulus payments are advance payment it is not returnable because government has passed legislation by which advance payments are adjusted against the recovery rebate credits. Since the irs does not have your 2020 tax year information it will use a previous year s information to calculate the amount.

The stimulus is an advance of a refundable tax credit on your 2020 taxes. Technically the payment is an advanced tax credit that offsets your tax liability for 2020. For most people the government bases the stimulus payment on their adjusted gross income for 2018 and 2019.

So nobody who received his her eligible amounts of stimulus check will have to return it. So the internal revenue service isn t giving you some of your 2020 tax refund upfront. Is the stimulus payment an advance on my tax refund.

In other words the bill created a refundable tax credit and the irs is paying out the amount of that tax credit to eligible taxpayer now. If stimulus payment is an advance should we payback it in year 2021. These are the ones the government will give.

The advance you ve been hearing about is in reference to a special tax credit that ll appear on the tax return you file in 2021 for the 2020 tax year a tax credit that wouldn t have been there if it wasn t for these stimulus checks. What is an advance tax credit.