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5 Coronavirus Stimulus Check Myths Debunked

By Christy Bieber - Apr 18, 2020 at 7:52AM

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Are you being misled about who is eligible for a stimulus check or how it will affect your taxes? Here's some facts to set the record straight.

Coronavirus stimulus checks have started coming this week, with most Americans getting up to $1,200 per person and $500 per child, depending on household income. 

While this money may serve as a lifeline for some during the COVID-19 pandemic, there are lots of misunderstandings about it that may have some Americans hesitant to use the funds.

Fortunately, once you know the truth about common COVID-19 stimulus myths, you should feel a lot better about getting your check. 

Woman sitting on couch looking at the check in her hand.

Image source: Getty Images.

1. Getting the money could affect your tax refund

If you normally get a tax refund, you may have heard that the stimulus check is just an advance of the money you'd normally receive when you file your tax returns. But this simply isn't true. It was the case for the stimulus checks issued during the Great Recession, but not this time around.

The stimulus check is a new refundable tax credit, so it will have no effect on any refund you're due from your 2019 tax filing (which you'll get when you file your taxes by the July 15, 2020 deadline). It will also have no impact on any 2020 refund you might get when you file those returns next year. 

2. You have to pay taxes on the money

Most of us are used to paying taxes on all of the income we receive. But you won't have to worry about getting a tax bill for your COVID-19 stimulus check.

Because the stimulus payment is a refundable tax credit, it isn't considered taxable income. You won't owe any taxes on the money you receive from the IRS, and the stimulus payment won't affect your adjusted gross income, so you won't have to worry about the money pushing you into a higher tax bracket. 

3. You have to pay the money back

The money from your stimulus check is yours to keep -- it is not a loan from the government, and it doesn't have to be repaid. This is true even if you get too much money.

The amount of your check will be based either on your 2018 or 2019 adjusted gross income; payments are reduced by $5 for each $100 earned over $75,000 for single filers, or over $150,000 for married couples filing jointly. Once your adjusted gross income reaches $99,000 or $198,000, you won't get a check. 

But if it turns out you earned way more than these limits in 2020, there's still no clawback provisions that would allow the government to ask for any part of the stimulus funds to be returned. 

4. Social security recipients won't get the money

Whether you're receiving Supplemental Security Income, Social Security retirement benefits, or Social Security disability benefits, you are still eligible for the stimulus funds. However, you won't get the money if you're claimed by someone else as a dependent on their tax returns. 

The IRS had announced Social Security beneficiaries who didn't file tax returns in 2018 or 2019 would have to submit a simple return, but they walked this back, and that's no longer necessary for those receiving benefits.

However, you do need to have started getting Social Security prior to 2020 -- otherwise, you'll need to fill out a simple form with the IRS to let them know you need a check if you didn't file a tax return in either 2018 or 2019. 

5. You must have direct deposit to get it

In most cases, the IRS will make stimulus payments directly to the bank account you have on file with them when you received your last tax refund via direct deposit. However, if you don't have direct deposit, they will still send you a check by mail. It will take a lot longer to get your money if you must wait for it to come in the mail, though. 

You can enter or update your bank information on the IRS website to get your payment via direct deposit, but be aware that high demand means you may have to wait for the site to load. 

Don't fall for myths about your stimulus check

Don't worry about spending your stimulus money because you think you'll owe taxes on it or fear you might have to repay it. The money is meant to help you during these troubled times. So when you get it, feel free to use it to pay bills, bulk up your emergency fund, or get invested during the coronavirus market downturn when stocks are on sale.

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