Do I Have to Pay My Stimulus Check Back?

Many Americans are beginning to receive their stimulus checks in wake of the COVID-19 pandemic, but plenty of people are likely wondering, "Is this really just free money, or is there a catch?"

Rumors have circulated on social media that Americans receiving the check will have to pay the money back come tax season in 2021, or that by receiving the check, it will cost them their tax refund for 2020.

But as Americans see checks between $500 and $2,400 hit their bank accounts (the amount depends on their yearly income and the number of dependents claimed), there is no need to fret: The money is being given with no strings attached. Despite rumors that you will automatically be taxed $1,200 next tax season, the IRS has said that this rumor is false.

"This is not an advance and there is absolutely no obligation to pay it back," U.S. Dept. of Treasury spokeswoman Patricia McLaughlin told Fortune.

Some of the confusion seems to come from the CARES Act's description of the checks as "recovery rebates," making people worry that they'll have to pay back the money or it will affect tax returns. "The recovery rebates (Economic Impact Payments) are refundable tax credits. This means that the rebate decreases a taxpayer's tax liability dollar-for-dollar, and the credit can be refunded to a taxpayer if they have no tax liability to offset," the Tax Foundation website explains.

For further clarification, the stimulus checks are determined by individuals' 2019 income, and if someone did not qualify for a check this tax season, they may qualify for one next year, depending on their 2020 income. The Tax Foundation's example explains that if someone earned $200,000 in 2019, they may not receive a check this year—but if they only made $35,000 in 2020, they would be able to receive the check in their 2020 tax return. Their website also has a nifty calculator where Americans can enter their Adjusted Gross Income and number of children and figure out the amount of their CARES Act check.

The Tax Foundation also quells any fears that people may have that the stimulus check is merely an advance of their 2020 tax refunds. "The recovery rebates are an additional refundable tax credit that will be applied to 2020 tax returns, but estimates are paid out to taxpayers based on 2019 or 2018 adjusted gross income (AGI)," the Tax Foundation website says. "This is an additional credit for the taxpayer on top of whatever refund or tax is owed for the 2020 tax year."