With the 2020 tax year software came the introduction of Worksheet 8.
The program will start a new return with a refund to account for the stimulus payments. However, the system does not know if your client received the stimulus payments. On the 2020 tax return, you are accounting for the two stimulus payments for 2020. One in early May, and the second in December 2020/January 2021. If they received their second payment in January or before filing the return, you account for it on this form.
An example of the refund before you enter anything into a return:
Fill out the information about the return, Client and Spouse, dependents, and income. Fill this worksheet out as one of the last things you do. You will notice the refund will go up based on the number of dependents on a return. That is how the stimulus was calculated, based on the number of dependents.
Now on 1040 Wkt 8, you have to adjust for what the client got. They will not be paying taxes on the Stimulus money, and they will not be paying it back. If you believe they are, you can continue to read Wkt 8 with all detail and refer to IRS.gov, which discusses the stimulus payments and tax treatment.
The following image shows the boxes you must fill in, or they will calculate once you start filling them in. The description next to the line number describes exactly what you need.
If you call our office to discuss this worksheet, we have to read the line descriptions too. You must know what your client got as a stimulus to file their taxes properly.
There are some tools at IRS.gov to help you determine what your client received. Gannon does not have any other inside information on this form and numbers.