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The final round of $600 stimulus payments has been distributed by the IRS, so you should have received yours by now. But what if your payment never showed up? How can you claim it as a tax rebate? And, do you need to pay taxes on your stimulus check? Here's everything you need to know.
I haven't received my stimulus payment yet, how can I get it?
The IRS advises that some $600 checks may still be in transit, particularly if your mail was forwarded to a new address. In such cases, you might consider delaying your tax filing. Otherwise, you should claim the first $1200 or the second $600 payment as a rebate on your tax return (assuming you qualify for them).
To claim this rebate, if you're using tax software, look for the 'Recovery Rebate Credit' option in your return (if your income is below $72,000, take advantage of the IRS Free File program at no cost). If you're filing manually, or prefer a more thorough explanation of how to enter this rebate on your Form 1040 or Form 1040-SR, check out this detailed walkthrough video.
However, there's one important consideration. If you received an IRS notice confirming the checks were sent or deposited—either via letter or the status on the Get My Payment tool—then the IRS suggests initiating a Payment Trace. This tool helps you confirm with the IRS whether the checks were lost, stolen, or destroyed. Before proceeding, follow these guidelines to ensure enough time has passed since the IRS' status confirmation date:
Five days after a direct deposit.
Four weeks since a check was mailed to a regular address.
Six weeks since a check was mailed to a forwarding address.
Nine weeks since a check was mailed to a foreign address.
The IRS will provide further instructions, and then they will reverse the check, allowing you to claim the rebate in your taxes (since the checks won’t be reissued). Unfortunately, the trace process can take up to eight weeks, and it’s important to follow through—if you skip the Payment Trace and simply claim the rebate in your tax return, the IRS might mistakenly determine you're not eligible for it.
If you're filing your 2020 tax return before the trace is completed, the IRS recommends that you don’t include the payment amount on lines 16 or 19 of the Recovery Rebate Credit Worksheet. In that case, you'll need to recover the funds when filing your 2021 tax return. It's certainly not the best outcome.
Do I need to pay taxes on the stimulus payments?
Not at the federal level (Oregon does tax it, though), as the stimulus payments are not considered income, meaning they are not taxable. Additionally, they won’t lower your tax refund when you file your 2020 return this year. These payments also don’t count as income when determining eligibility for federal government assistance or benefit programs.
However, the IRS can allocate the stimulus funds towards unpaid alimony for the first round of checks. The second round may also be used for unpaid alimony, student loans, and certain federal or state back taxes.
Will the timing of my tax filing impact my third stimulus payment?
Strangely, yes, due to timing. Since relief legislation is expected to pass before the close of tax season, not everyone will have filed their 2020 tax return. In such cases, the IRS will base your check on your annual gross income from either 2019 or 2020, whichever they have on record. If your income in 2020 was lower than in 2019, it’s best to file early to maximize your return. However, if you earned less in 2019, you may want to delay filing until later in March, when checks are calculated and distributed. For more details, check out this Mytour post.This article was updated on Feb. 19, 2021 to clarify that Oregon taxes stimulus checks, but they are not taxed federally.
