The IRS has a message for people who are still waiting for federal stimulus payments: The money is already out the door.
The IRS said this week it has sent more than 160 million checks – $ 1,200 for adults and $ 500 for children – directed by the Coronavirus Aid, Relief and Economic Security (CARES) Act, which represented the first round of stimulus payments to American households. As of December, it also sent over 147 million second-round check payments, which offered $ 600 for each eligible adult and child.
Certainly, Congress is currently negotiating another round of stimulus aid, which could result a third check for eligible householdsIf that $ 1.9 billion relief effort is approved by lawmakers, it could be signed into law by President Joe Biden by the end of March, Wall Street analysts say. In that case, the IRS would have the power to distribute a third round of checks. So far, the IRS has been given the power to send two rounds of checks – and all those payments were said to have been sent or deposited into bank accounts.
In total, the IRS has disbursed more than $ 410 billion in so-called Economic Impact Payments, emergency aid to help people during the pandemic, to American households since April. But while those checks have been delivered to most eligible individuals, the IRS has struggled to reach some of the most financially vulnerable Americans, such as those who don’t have bank accounts or who aren’t making enough money to file tax returns.
Those issues have a complicated distribution of stimulus checks, because the IRS relies on a person’s most recent tax return to determine whether they qualify for the payments, as well as determining where to send the money.
“That was a big deal – those people who do qualify but haven’t filed a report,” and so are not on the IRS radar, said Jody D’Agostini, a certified financial planner with Equitable Advisors. Some of the people who missed it are the ones who probably need the stimulus money the most, she added.
While the IRS said all checks were issued, it added that some checks may still be in the mail. And if you haven’t received one or both of the incentive payments – or haven’t received the correct amount – you still have a chance to claim the money when you file your 2020 tax return, the agency said.
“If individuals have not received payment – or if they have not received full amounts – they may be eligible to claim the Recovery Rebate Credit and must file a 2020 tax return,” the tax authorities said in a statement.
That could happen if someone’s income fell in 2020, as experienced by the millions of Americans who took leave or lost their jobs last year. “Some people didn’t qualify through their 2018 and 2019 tax returns, but then had a terrible 2020 and they didn’t get the check, but they really did qualify,” said D’Agostini. Those people can claim the payment by filing a 2020 tax return.
“Financial difficulties”
The IRS has come under fire from some critics over the distribution of the incentive payments, with national taxpayer attorney Erin M. Collins calling the agency for failing to ensure that checks reach all eligible people. Households that haven’t received their checks “are probably in financial trouble now,” Collins wrote in a report to Congress last month.
According to her, taxpayers should not wait to file their 2020 tax returns in early 2021 to receive their payments. Unfortunately for those who missed it, the IRS currently offers no other option. It said people who missed a payment or didn’t receive the correct amount should wait until they file their 2020 tax returns to claim the extra money.
How to Claim Your Incentive Money
The first step is to figure out how much of the missing incentive payments you should claim on your 2020 tax return.
The IRS, which began accepting tax returns on Feb. 12, calls the checks “reclaim discounts” on its tax forms. That’s because, technically, the payments were actually tax refunds paid prior to filing your taxes.
To help determine if you owe more, the IRS has published a recovery rebate worksheet, asking questions about eligibility (such as your income) and how much you’ve received in the two stimulus checks so far. If you find that you owe more, you can enter the amount on line 30 on IRS Form 1040.
If you don’t remember how much you received in the first two rounds of incentive payments, you can create or view your account on the IRS website. Additional incentive money will be included in your tax refund. According to the tax authorities, most taxpayers receive their refund within 21 days.
Now that Congress is working on one third aid package, millions of households could receive a third incentive check in the coming weeks, which happens to fall in the middle of the tax return season.
People who lost income in 2020 or had a baby last year may want to file their taxes as soon as possible to make sure they receive the correct amount at their next stimulus check. Otherwise, the IRS could rely on your 2019 tax returns to determine your eligibility.
When that happens, people may still have a wait ahead of them until they can update their information with the IRS and claim their extra incentive money.