In March 2020, the Federal Government passed the CARES Act. This act, a result of the massive COVID-19 pandemic that has infected over one million Americans, was responsible for the establishment of..
So, do I have to pay back the stimulus?
No. Unlike other stimulus programs - like some of the ones passed in the aftermath of the Great Recession - you will never have to pay this one back. It is not a governmental loan.
Got it! Will it cut into my tax refund next year?
No! The money is yours, free and clear. Indeed, the bill is very clear on this: You do not have to pay it back. It is yours and not any sort of tax credit or advanced refund. Furthermore, the income you receive from your stimulus payment will not count as income against your federal, state or local taxes. Your tax refund next year will be completely unaffected by this stimulus program. Indeed, a variety of the other changes in the CARES Act, like those that removed the 60% of AGI limit for charitable contributions may wind up giving you a bigger refund than you are used to. Due to these provisions, and others, the CARES Act is actually likely to expand your refund.
So why do so many people think this is the case?
The language of the bill led to some confusion. The direct payment was written as an "advance tax credit," which was the legal and financial mechanism by which the stimulus money was paid. The stimulus money was actually a payment that you received via the Internal Revenue Service. However, the legal structure of the tax credit led to somewhat confusing interpretations. Fear not, however: It was written this way to make it easier for the IRS to pay the money. You won't owe anything additional next year, and your refund will be unaffected by the stimulus payment.
Also not helping this interpretation was certain viral posts on social media that claimed the government was scamming you into owing more in taxes next year. Needless to say, they were wrong. Make sure you get your news from reputable news sources!