If you received an Economic Impact Payment earlier this year, be sure to keep Notice 1444 “Your Economic Impact Payment” with your tax records. The image above is an example of what this notice looks like. This notice, which the IRS would have mailed to your last known address within 15 days of the payment being distributed, provides information about the amount and distribution method of the payment, as well as information about how to report any missing payment. If you believe your payment amount was wrong or you need to claim additional credits, this notice will become especially important for filing your 2020 tax return.
Generally speaking, the Economic Impact Payment is not taxable to you for federal income tax purposes, but it will reduce any Recovery Rebate Credit that you can claim on your 2020 Form 1040 or 1040-SR. The Recovery Rebate Credit, authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, may be claimed by any eligible individual who did not receive the full amount of the Economic Impact Payment.
Be sure to file this notice with the other important tax records you will receive in the coming months, including any W-2s, 1099s, and other income and charitable donation documents. The IRS recommends keeping a copy of prior tax returns and related tax documents for at least three years.
If you have any questions about the economic impact payment you received, tax records, or anything tax or investment related, please do not hesitate to contact us. We’d love to hear from you.