Tax on Steroids – Confusion over Stimulus Payments

During the COVID crisis, Congress approved three stimulus packages. Like any addiction, the addict usually remembers the first experience but really can’t remember the ones that follow or recreate the “high”.

The same happened with all the stimulus payments. Taxpayers have forgotten not only when they got them but how much they got (or how “high” they were). And since these all have to be disclosed on the tax return it makes confusion.

Let’s do a quick review.

in Spring of 2020 the first stimulus payment of $1200 was issued. $1200 to each adult and $500 for each dependent.

In December 2020, $600 per person was issued. Most received the $600 January 2021.

Then lastly, in the spring of 2021, everyone at $1400 apiece.

When we filed the returns for the 2020 tax year, we had to report what we received with the first and the second stimulus ($1200/$500 and $600) even though the second one ($600) was mostly received in 2021. On this year’s 2021 tax year returns we have to report what we received for the third stimulus ($1400).

So now we are filing tax returns for 2021 tax year and there is plenty of confusion. Many think that because the $600 was received in 2021 that that is all we have to report for 2021 but then they forget the fact that they got a $1400 that a couple of months later. And though the last stimulus was probably designed to get the biggest “high”, a lot of people just forgot to look at their bank accounts and marvel at the fact that they were able to pay so many bills. Already this year, a number of clients have been surprised to find the $1400 deposit way back in March of 2021 “How did that get in there!!??” I guess once you get hooked, you sort of forget about your last dose. There’s nothing like the first time, right!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s