To Our Clients & Friends:
CORRECTION TO PRIOR STIMULUS CHECK INFORMATION:
Immediately after passage of the CARES Act, we issued an explanation of the rules for the calculation of stimulus checks as we understood them at the time. Our explanation was that any excess stimulus check that a taxpayer received because of a larger 2020 Adjusted Gross Income (AGI) than 2018 AGI or 2019 AGI would have to be repaid to the IRS. We are now told that that is not the case. Rather, if a taxpayer receives a stimulus payment that is excessive based on 2020 AGI, the taxpayer will be allowed to keep the excess and it will still not be taxable. For taxpayers who do not receive a large enough check, those taxpayers will be able to claim the difference on their 2020 income tax returns as an estimated payment toward their 2020 tax, so it will decrease their tax due or increase their over-payment for 2020.
We apologize for this confusion. However, we are confident there will continue to be much confusion as the IRS issues more detailed instructions and interpretations.
