Some people are online for extra cash if they don’t get what they were entitled to from the three stimulus checks authorized by Congress so far. But the IRS cautions that some people may not get what they expect.
So-called “over-up” payments are now sent by the IRS to people who have not received all of their payments from the three rounds of federal stimulus checks, each with their own eligibility thresholds and payment amounts. The tax agency said it now sends additional payments when processing 2020 tax returns, which may indicate that some people owe more money.
For example, all three rounds of stimulus payments provide money to dependent children, but people who had children in 2020 might not have received all three payments for their children. This is because the IRS relied on a family’s last income tax return to determine their payment – and the first two payments were issued before the start of the 2020 tax season. This means the IRS would have gone. based on 2019 returns for the first two checks. Since these 2019 statements would not have included information on children born in 2020, the agency would not have sent these payments.
The 2020 tax filing season, however, gives people a second chance to claim the stimulus money they are owed but have yet to receive. The IRS says there are two ways for people to do this.
- First, they can claim a correction on their 2020 tax return through the “recovery refund credit,” which is on line 30 of Form 1040, for the first two stimulus payments. This extra money will be sent with your tax refund.
- Second, if the IRS has already sent out the third stimulus check, but you owe more based on your 2020 tax returns, the IRS will automatically adjust your payment after you file your taxes with what is called a “increased” check. This could happen for high-income people whose income fell in 2020, which would allow them to qualify for one or all of the stimulus payments, for example.
To be sure, figuring out if and how much you are owed is complicated and may require active effort on the part of people who are owed more money. On the one hand, the IRS says people who don’t normally file tax returns – as in the case of some low-income households – must submit a tax return to get their extra money for the first two checks via the recovery reimbursement credit.
“You must file a 2020 tax return to claim a recovery refund credit, even if you are not required to file a tax return,” the IRS said earlier this year.
Less than expected? It may depend on dependents
The IRS is now warning that some people may get smaller recovery refund credit adjustments than they might have expected. If you filled out line 30 on the Form 1040, the IRS will recheck your claim – and if there are any issues, you might not get what you expect, the agency said.
If that happens, the IRS said it would send a letter or notice explaining any changes – but it also warned that such an issue could cause a “slight delay in processing the return.”
Two potential pitfalls, according to the IRS, relate to dependents and the different payment amounts and eligibility rules that applied to each stimulus cycle. For example, the first round of stimulus checks provided $ 500 per eligible dependent, the second $ 600, and the third distributed $ 1,400 per child.
In addition, the first two checks included an age threshold for eligible dependents, excluding dependent adolescents over 17 from payment. The third check provided $ 1,400 for each dependent, regardless of age.
A problem will arise if people claim an additional $ 500 or $ 600 on the first two checks on their tax return, but their child has already turned 17 on January 1, 2020. If so, the IRS says that these children are not eligible for the first two stimulus checks, and the taxpayer has no chance of obtaining this adjustment.
The second shortfall could occur if a child were declared dependent on another person’s 2020 income tax return. This can happen in the case of divorced or divorcing parents, for example. The person who declares the child as a dependent on their tax return should receive the stimulus check. But some divorced parents alternate the years in which they claim their children as dependents, which can complicate the problem. Only the parent who claimed the child on their 2020 taxes should get the recovery refund credit adjustment, according to the tax website 1040.com.
Mathematics and Social Security Numbers
Other issues can also result in lower-than-expected payments, such as math errors on your tax return. This can impact your increased or adjusted payment if you miscalculated your adjusted gross income because your AGI determines the threshold for your eligibility for stimulus money. (High-income households were excluded from the three checks.)
The IRS also warns that if you do not provide a valid Social Security number for the job, you will not be eligible for additional money through the recovery rebate credit. That’s because the first two checks required at least one filer in a household to have a valid Social Security number to qualify, which excluded some immigrant families.
The third check, however, expanded eligibility to allow children with a Social Security number to qualify, even if their parents only have an Individual Tax Identification Number (ITIN), which is common among undocumented immigrants and other non-citizens who are not eligible for the Security Numbers program.