My husband and I have a fixed income of $50,000 a year. That was our 2018 income and will be our 2020 income. But in 2019, we had a capital gain from selling a rental property. That disqualified us for $1,200 relief payments. But I read that when we file our 2020 tax return, if our 2020 income meets the qualifying guidelines, we're eligible to receive our $2,400 payment. Is this correct?

It's mostly correct.

"If you didn't qualify based on your 2019 income, but you're eligible based on lower 2020 income, you'll be able to claim a tax credit against your 2020 tax liability," says Ed Slott, a Rockville Centre tax accountant. The result: Instead of receiving a relief check, you'll get a $2,400 rebate applied to your 2020 tax return. That rebate will either increase your tax refund or reduce the amount of tax you owe.

The Internal Revenue Service began distributing the "economic impact" relief payments in April, after determining everyone's eligibility based on their 2019 or 2018 tax returns. Individuals with adjusted gross income (AGI) of up to $75,000 qualify for the full $1,200 payment, and married couples filing jointly with AGI of up to $150,000 qualify to receive a $2,400 payment.

The relief was really intended for 2020, not 2019, says Slott. Congress wanted to get the checks out as quickly as possible, so taxpayers' eligibility was based on their 2019 tax returns — or on 2018 tax returns for people who hadn't yet filed their 2019 returns — but those payments were really an advance for 2020.

The bottom line

If you were ineligible for a $1,200 stimulus payment based on your 2019 income, but you qualify based on your 2020 income, you can claim a tax credit on your 2020 tax return.

More information

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