Some Americans are lining up to get extra government cash if they haven’t received as much as they were entitled to in the three stimulus checks approved by Congress so far. But the IRS warns that some people may not get as much money as they expect.
The IRS is now sending those “plus-up” payments to people who have not received their full payment from the three rounds of federal stimulus checks, each of which has its own thresholds and payment amounts. The IRS said it is now sending additional payments as it processes its 2020 tax returns, which may indicate that some people owe more money.
Some of those extra payments are going into accounts today or will arrive in the mail soon by check or prepaid debit card, the IRS said Wednesday. It said about 25 million payments, worth $ 36 billion, were distributed with an official payment date of April 7, although only about 1 million of those represent “plus-up” payments.
There are a number of reasons why people can get a “plus-up” check. While all three rounds of incentives generate money for dependent children, people who had children in 2020 may not have received all three payments for their children. That’s because the IRS relied on a family’s most recent tax return to determine their payment – and the first two payments were made before the 2020 tax season began. That means the IRS would have relied on 2019 returns for the first two checks. Because those 2019 returns wouldn’t include information about children born in 2020, the agency wouldn’t have sent those payments.
However, the 2020 tax return season gives people a second chance to claim incentive money that they owe but have not yet received. The IRS says there are two ways people can do this.
- First, they can claim an adjustment to their 2020 tax return through the “Recovery Rebate Credit,” which is on line 30 of Form 1040, for the first two incentive payments. That extra money will be sent with your tax refund.
- Second, if the IRS has already sent 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’s called a “plus-up” check. This can happen for higher-income people whose income has declined in 2020, making them eligible for one or all of the incentive payments, for example.
To be sure, figuring out if and how much you owe is complicated, and it may take some active effort on the part of people who owe more money. First, the IRS says that people who don’t normally file a tax return – as in the case of some low-income households – must file a tax return to get their extra money for the first two checks through the Recovery Rebate Credit.
“You must file a 2020 tax return to claim a chargeback discount, even if you don’t otherwise have to file a tax return,” the IRS said earlier this year.
Some people may see smaller Recovery Rebate Credits than they expect if they owe money to the federal government or government agencies. Federal and state debt will be withheld from any additional stimulus payments that claimants would otherwise have received. But the IRS said there is one exception: It will not withdraw money for delinquent federal income tax debt, effective March 18.
Less than expected? It may depend on dependents
The IRS is now warning that some people may get smaller Recovery Rebate Credit adjustments than they may have expected. If you filled out line 30 on Form 1040, the IRS will double check your claim – and if there are issues, you may not get what you expect, the agency said.
If that happens, the IRS said it would send a letter or message explaining any change – but it also warned that such a glitch could result in a “slight delay in the processing of the return.”
Two potential pitfalls are associated with dependents, and the different payment amounts and eligibility rules that applied to each round of incentives, according to the IRS. For example, the first round of incentive checks fetched $ 500 per eligible dependent, the second $ 600, and the third handed out $ 1,400 per child.
In addition, the first two checks include an age limit for eligible dependents, excluding teenage dependents over the age of 17. The third check raised $ 1,400 for each dependent, regardless of age.
A problem arises when people claim an additional $ 500 or $ 600 from the first two checks on their tax returns, but their child had already turned 17 on January 1, 2020. If so, the IRS says those children are not in qualify for the first two incentive checks, and the taxpayer is unlucky to get that adjustment.
The second shortage could occur if a child is claimed to be dependent on someone else’s 2020 tax return. This can happen with divorced or divorcing parents, for example. The person who claims the child is dependent on their tax return should receive the stimulus check. But some divorced parents alternate years when claiming their children as dependents, which can complicate the problem. According to the tax website 1040.com, only the parent who claimed the child on their 2020 taxes should get the correction from the Recovery Rebate Credit.
Math Switches and Social Security Numbers
Other problems can also lead to lower-than-expected payments, such as math errors on your tax return. This can affect your plus-up or adjusted payment if you have miscalculated your adjusted gross income, as your AGI determines the threshold at which you qualify for incentive money. (Households with higher income were excluded from all three controls.)
The IRS also warns that if you don’t provide a Social Security number that is valid for work, you won’t 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 excludes some immigrant families.
However, the third check expanded the eligibility to allow children with Social Security numbers to qualify even if their parents only have an Individual Taxpayer Identification Number (ITIN), which is common among undocumented immigrants and other non-citizens who do not qualify for social security. Security numbers.