Will Uncle Sam Tax My Stimulus Payment?

Photo by Ivan Marc from Shutterstock

It’s not your average tax credit

As we’ve already mentioned, many Americans believe that Uncle Sam will add their stimulus payments to their income, therefore, they are expecting to see a bigger tax bill or a reduction in their tax refund when filing their it. However, that’s definitely not the case for stimulus payments.

We all know that tax deductions are a great thing as they minimize your income, which eventually will decrease the amount of tax money you owe to the IRS. For example, if you had $50,000 in terms of income and a tax deduction of $5,000, your taxable income would be reduced by $5,000.

Also, if you find yourself in the 12% tax bracket, the taxes you owe will be minimized by $600. This amount of money represents 12% of $5,000.

So, yes, tax deductions are great, but when compared to tax credits, your financial balloon gets burst pretty quickly.

1 thought on “Will Uncle Sam Tax My Stimulus Payment?”

  1. My wife and I have already given $1,200.00 to our daughter who is about to lose her job. We also plan to give her any additional new monies we receive. Where does that place us tax-wise–or her?

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