How the second stimulus check will be taxed by the IRS
An agreement on the fifth stimulus relief package was, among other measures, expected to include a second round of payments as Americans wonder about tax implications.
More time has passed and more discussions taken place following the return of Congress. In the bill there was a belief that a second round of stimulus payments, worth up to $1,200 per individual, would be included among the measures. This, however, has now been thrown into doubt, at least in the short-term.
Still awaiting second stimulus check
Senate Democratic leader Chuck Schumer is feeling confident about a new bill passing but was not happy with the latest proposal from Republicans.
"Yes. There's a good chance that they will feel the pressure, once they see the Democrats are not going to fold to this emaciated bill which leaves so much out,” he told CNN on Wednesday.
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So with millions of Americans still hopeful, but not necessarily expectant, of a second stimulus payment anytime soon, questions remain over eligibility, likely dates for payment, and then doubts over how it will be taxed.
Will the second stimulus check be taxed?
Roughly 160 million people in the US received a stimulus payment worth up to $1,200 as part of the CARES Act signed back in March, a payment that was not considered taxable income by the IRS.
It is still generally expected that there will be a second round of payments before the end of the year and when the package is signed off, the rules applied for the first stimulus check are likely to serve as a model for the second.
This would mean that people would not pay taxes next year on the IRS payment as it is not considered to be income under the definition, and any payment received in 2020 would not reduce your return or increase the amount you owe at the time you file your taxes in 2021.