How Will the Stimulus Package Affect Your Taxes
Bedford, NH Resident Has Concerns
The government’s recent stimulus package was distributed to millions of Americans. The stimulus money is not considered income by the IRS and will not be taxed. While the money itself is not taxed, this will count toward your household’s adjusted gross income for 2020. For some, this additional income may be enough to put you into a higher tax bracket.
A Bedford resident was pleased to receive his stimulus check from the government. Not wanting to be in for a surprise when filing his 2020 taxes, he contacted Merrimack Tax Associates to better understand how this could impact his tax bill.
Stimulus Check is Not Considered Taxable Income
Receiving a stimulus check from the government will not increase the amount of taxes that you owe, or affect any future tax refund that you may be eligible for. The money is not considered taxable income and as such will not affect the amount of taxes you owe at the end of the year. In fact, the only correlation between the IRS and the stimulus package is to verify your income to ensure that you qualify for the package.
Household’s Adjusted Gross Income May Be Affected
While it is not considered taxable income, any stimulus money that you receive will be included in your adjusted gross income. This won’t directly be taxed, but it could affect which tax bracket you fall into as it increases your household income. If it does bump you into the next tax bracket, you may find yourself paying a higher tax rate for earned income in 2020.
The Bedford resident was pleased to hear that the stimulus package itself would not be taxed. After speaking to a professional at Merrimack Tax Associates, he is confident that the money will not have a negative impact on his overall tax rate either.