Questions about stimulus checks

Is Social Security affected? How about other benefits?

A: No. The good news is that your stimulus payment is not taxable income.

Uncle Sam can tax up to 85% of your Social Security benefits. To calculate the federal tax on your benefits, you first need to determine your “base income” (often referred to as your “provisional income”). Your base income is equal to the combined total of (1) 50% of your Social Security benefits, (2) your tax-exempt interest, and (3) your adjusted gross income (not including the student loan interest deduction or the tuition and fees deduction).

If you’re single, none of your Social Security benefits are taxed if your base income is less than $25,000. If you’re married and filing a joint return, the threshold is $32,000. If a single filer’s base income is between $25,000 and $34,000, then up to 50% of his or her Social Security benefits may be taxable.

The 50% rate is applied to joint filers with a base income from $32,000 to $44,000. Finally, if your base income is more than $34,000 on a single return, or $44,000 on a joint return, up to 85% of your benefits may be taxable.

Any additional taxable income will increase your adjusted gross income, which then increases your base income for Social Security tax purposes. If your base income goes up enough to move you from the 0% to the 50% bracket, or from the 50% to the 85% bracket, then you’re looking at a tax increase.

But because the stimulus payment is not taxable income, it will not increase your AGI, or your base income.

A: It could. For instance, if you were claimed as a dependent on your daughter’s last tax return, then you’re not eligible for a stimulus check payment.

Q. I receive other government benefits besides Social Security. Will the stimulus check make me ineligible for these other benefits?

A. No. Eligibility for these additional benefits is often based on your income. However, stimulus payments will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.

For example, stimulus payments do not count as income, and are excluded from resources for 12 months, for the purposes of qualifying for benefits under programs that support many Social Security recipients, such as Medicaid, Supplemental Security Income, Supplemental Nutrition Assistance Program and HUD housing assistance.