While there is still no clear indication of when Americans could receive a second stimulus check, many are wondering if the second stimulus check would be taxed by the IRS. While the details of a second stimulus check have not yet been settled, the stimulus checks were not considered taxable income when they were issued in the first round and there have been no discussions about changing that to make them taxable for the second round. Therefore, it’s unlikely that the second stimulus checks will be taxed.
When the first round of payments was issued, the IRS clarified that they would not be taxed. The revenue service’s page with frequently asked questions about stimulus checks (referred to as Economic Impact Payments) states:
The payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.
Further, as AARP explained, the stimulus check is actually a tax credit. That means that it won’t be taxed, but it also won’t “reduce your future tax refund when you file your tax return next year.” The group states that the stimulus check is in effect an advanced refundable tax credit because you’re receiving “what amounts to a refundable tax credit now in the form of a stimulus payment, rather than waiting to get the money from the credit in 2021 when you actually file your 2020 tax return.”
Changes Have Been Proposed for the Second Round of Stimulus Checks, But There Have Been No Discussions About Making Them Taxable
Although it’s possible that the second stimulus checks will have some changes from the first round, those changes are unlikely to include making checks taxable. According to CNBC, some of the changes proposed by the House Democrats include “raising dependent money to $1,200 for a maximum of three children,” meaning that families could be eligible for as much as $6,000. They are also proposing eliminating age limits on dependent pay and expanding the eligibility to include nonresident aliens.
Republicans are also open to changing the second round of stimulus checks, with a proposed plan that also eliminates age caps for dependents. Their proposal would see adults receive $1,200 and $500 for dependents, CNBC reports.
Both Parties Support Another Round of Stimulus Checks But Have Not Reached Consensus Over the Details
At this time, both Democrats and Republicans support issuing a second round of stimulus checks, but talks have been deadlocked over the details of the relief payments. As negotiations resumed this week, AS reported that Treasury Secretary Steven Mnuchin said, “What’s more important is… getting money to American workers, American families, kids. There are tremendous areas of agreement, and that’s what we should be doing right away. I would publicly say I am willing to sit down at the negotiating table with the speaker with no conditions whatsoever any time.”
In a statement reported by the outlet, leader of the House of Representatives Nancy Pelosi said she spoke to Mnuchin by phone and, “Sadly, this phone call made clear that Democrats and the White House continue to have serious differences understanding the gravity of the situation that America’s working families are facing.”
In a recent statement to CNBC, Vice President Mike Pence said, “Nobody wants to give direct payments to American families more than President Donald Trump. We sent those checks to American families. It helped people through this tough time.” The Senate is set to return from recess on September 8 while the House of Representatives will return on September 14.