Some Americans are in line to get extra government cash if they didn't receive as much as they were entitled to in the three stimulus checks authorized so far by Congress. But the IRS is cautioning that some people may not get as much money as they expect.
The tax agency is now sending out those "plus-up" payments to people who didn't get their entire payments from the three rounds of federal stimulus checks, each of which have their own eligibility thresholds and payment amounts. The IRS said it is now sending out extra payments as it processes 2020 tax returns, which may indicate some people are owed more money.
Some of those plus-up payments will land in accounts today or will soon arrive in the mail via check or pre-paid debit card, the IRS said on 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 might get a "plus-up" check. While all three rounds of stimulus payment provides money for dependent children, people who had children in 2020 might not have received all three payments for their kids. That's because the IRS has relied on a family's most recent tax return to determine their payment — and the first two payments were issued 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 would not have included information on children born in 2020, the agency wouldn't have sent those payments.
The 2020 tax filing season, though, is giving people a second chance to claim stimulus money that they are owed but haven't yet received. The IRS says there are two ways people can do this.
- First, they can claim a correction on their 2020 tax return through the "Recovery Rebate Credit," which is on Line 30 of Form 1040, for the first two stimulus payments. That extra money will be sent with your tax refund.
- Second, if the IRS already sent the third stimulus check but you are owed more based on your 2020 tax returns, the IRS will automatically adjust your payment after you've file your taxes, with what's called a "plus-up" check. This could happen for higher-income people whose income dropped in 2020, allowing 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 some active effort from people who are owed more money. For one, the IRS says people who don't normally file tax returns — such as in the case of some low-income households — must submit 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 Recovery Rebate Credit even if you are otherwise not required 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 federal government or state agencies. Federal and state debts will be taken out of any extra stimulus payments those claimants otherwise would have received. But the IRS said there is one exception: It won't take out money for past due federal income tax debts, effective as of March 18.
Less than expected? It can depend on dependents
The IRS is now cautioning that some people may get smaller adjustments from the Recovery Rebate Credit than they might have expected. If you filled out Line 30 on Form 1040, the IRS will double-check your claim — and if there are problems, you might not get what you expect, the agency said.
If that happens, the IRS said it will send a letter or notice explaining any change — but it also warned that such a glitch could lead to a "slight delay in processing the return."
Two potential pitfalls are tied to dependents, and the differing payment amounts and eligibility rules that applied to each round of stimulus, according to the IRS. For instance, the first round of stimulus checks provided $500 per eligible dependent, the second one $600 and the third handed out $1,400 per child.
In addition, the first two checks included an age cutoff for eligible dependents, excluding from payment teen dependents over the age of 17. The third check provided $1,400 for each dependent, regardless of age.
A problem will occur if people claimed an extra $500 or $600 from the first two checks on their tax return, but their child had already turned 17 on January 1, 2020. If that's the case, the IRS says those children aren't eligible for the first two stimulus checks, and the taxpayer is out of luck for getting that adjustment.
The second shortfall could happen if a child was claimed as a dependent on another person's 2020 tax return. This could happen in the case of divorced or divorcing parents, for example. The person who claims the child as a dependent on their tax return should receive the stimulus check. But some divorced parents alternate years when they claim their children as dependents, which can complicate the issue. Only the parent who claimed the child on their 2020 taxes should get the adjustment from the Recovery Rebate Credit, according to the tax website 1040.com.
Math mix-ups and Social Security numbers
Other problems can also lead to lower-than-expected payments, such as math errors on your tax filing. This can impact your plus-up or adjusted payment if you miscalculated your adjusted gross income because your AGI determines the threshold of your eligibility for stimulus money. (Higher-earning households were excluded from all three checks.)
The IRS also warns that if you don't provide a Social Security number that's valid for employment, you won't qualify for extra 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 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 are ineligible for Social Security numbers.