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There are lots of misconceptions surrounding the government's initiative to send out stimulus checks to millions of Americans. We're here to bust some of the myths.

Many eligible American households have already received their Economic Impact Payments, or “stimulus checks” as they’re more commonly known.

However, there is a lot of misinformation circulating about how they will affect Americans’ future tax bills, whether or not the money will need to be repaid, and more. Read on to learn what is fact vs. fiction when it comes to stimulus checks.

The IRS is sending prepaid debit cards to some eligible stimulus check recipients.


It may seem a little suspicious to find a prepaid debit card in your mailbox that says it’s from the government. But, for about 4 million Americans, that is, in fact, how they will receive their stimulus checks.

While the vast majority of stimulus checks may have already been delivered, there are still eligible Americans waiting to receive theirs. If you are one of the ones that are still waiting for your check, it’s most likely because the Treasury Department doesn’t have your bank information on file.

On May 18, the Treasury announced that they would send prepaid debit cards to about 4 million of the eligible recipients who had not provided their bank information. The reasoning behind the decision was that a prepaid debit card would be more useful than a paper check for Americans who don’t have a bank account,

The Economic Impact Payment (EIP) cards will be issued by MetaBank and can be used anywhere Visa cards are accepted. Also, recipients will be able to get cash from in-network ATMs, transfer funds to a bank account without fees, and check their balance online.

Related: Here’s What Non-Filers Need to Do to Get Their Stimulus Check

The stimulus checks were government loans that will need to be paid back.


This is completely false. The Economic Impact Payments are not loans in any sense of the word and you will not have to pay any of the money back.

The CARES Act did approve a loan program aimed to offer relief to small businesses called the Paycheck Protection Program (PPP). And small businesses negatively impacted by the coronavirus can also apply for the Economic Injury Disaster Loan (EIDL) program. Learn more about these emergency loans.

But both of these small business loan programs are completely unrelated to the individual stimulus checks. If someone calls you claiming to be from the IRS or some other government agency and says that you need to pay back your stimulus check, hang up the phone. You’re most likely talking to a scammer.

Related: COVID-19 Financial Scams to Avoid

Your stimulus check will reduce your tax refund next year.


Much of the confusion in regards to this question arises from the Economic Impact Payments (EIP) being described as an “advance payment” of a 2020 tax credit. But the key thing to understand is that this is advanced tax credit not an advanced tax refund.

The refundable EIP tax credit is completely unrelated to whether or not you deserve a refund on your income tax payments next year. On paper, this will show up on your 2020 tax return just like any other refundable tax credit. The only difference is that with this particular credit, you can receive the money now instead of having to wait until you filed next year’s return.

However, while a stimulus check can’t diminish your 2020 refund, it could increase it. We’ll dig deeper into how that could happen in our last fact vs fiction question.

Stimulus checks are considered taxable income.


Once again, the stimulus checks are simply an advanced payment of a 2020 refundable tax credit. As such, they are not considered taxable income and, thus, will have no affect on your 2020 taxable income.

There is another stimulus check on the way.

FICTION (for now)

There very well could be more stimulus checks sent out in the future. In fact, there has already been a bill introduced that calls for additional Economic Impact Payments to be issued. However, no bill has passed both houses of Congress as of yet.

The current piece of legislation to include a call for extra stimulus checks is the HEROES Act, which recently passed the House and is now with the Senate. The bill calls for another $1,200 per person to be sent to eligible recipients.

In its present form, the bill faces an uphill battle to Senate approval due to several features of it that Senate Republicans aren’t happy with. But if Democrats and Republicans are able to agree on a modified form of the HEROES Act, it could result in more stimulus checks being sent out.

Ineligible Americans could regain eligibility for a stimulus check after filing their 2020 tax return.


To qualify for the stimulus check, you needed to meet certain age and income requirements. If your adjusted gross income in 2018 or 2019 was above 99,000 ($198,000 if your filing status was married filing jointly), then you didn’t qualify. Also, if you were a dependent child older than age 17 (like many college students), neither you nor your parents were eligible to receive any payments.

However, if your circumstances change in 2020, you could still receive a check next year. For example, let’s say that you were disqualified from receiving a stimulus check because your income in 2018 or 2019 was above the limit. If your income in 2020 decreases and it falls back within the eligible limits, you’ll be able to claim some or all of the $1,200 credit on next year’s return.

In similar fashion, imagine that a child (or other relative) older than age 17 was claimed as a dependent in 2019 but will not be claimed in 2020. In that case, while the dependent could not receive a stimulus check this year, they could still claim their $1,200 when they file their 2020 return.

Looking for more information on Economic Impact Payments? Visit the IRS online information center.

Related: These Are the Smartest Ways to Spend Your Stimulus Check

Also Read: Here’s How to Create Your Own Stimulus

Author Bio

Total Articles: 48
Clint Proctor is a freelance writer and founder of WalletWiseGuy.com, where he writes about how students and millennials can win with money. When he's away from his keyboard, he enjoys drinking coffee, traveling, obsessing over the Green Bay Packers, and spending time with his wife and two boys.

Article comments

1 comment
Steveark says:

What’s really crazy about the stimulus money is that it went to people like who have no need for help. Most retired multimillionaires have a low enough AGI to qualify even though they don’t need the money. I took it anyway, I mean who is going to pass up free money?