The latest stimulus check update from the IRS includes a mix of both good news as well as an explanation of why some people might be getting an unwelcome surprise after filing their 2020 federal tax return.
First, the good news: On Wednesday, the tax agency announced the disbursement of 25 million more stimulus checks as part of the next batch of payments stemming from the “American Rescue Plan” legislation that President Biden signed in early March. That news brings the total number of stimulus payments sent out since then to more than 156 million checks, totaling more than $372 billion. And the more than 25 million payments included in today’s announcement are valued at more than $36 billion. The tax agency says that the largest chunk of these new payments went to Social Security beneficiaries who didn’t file a 2020 or 2019 tax return and who didn’t use the IRS Non-Filers tool last year.
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Meanwhile, the IRS is also explaining why some people who’ve already filed their tax returns are seeing a smaller than expected Recovery Rebate Credit — something the agency has been sending out letters about to make sure people understand why they might be getting a smaller amount than they expected.
“It’s important to remember that the first and second Economic Impact Payments (EIP) were advance payments of the 2020 credit,” the IRS explains in a news release. “Most eligible people already received the first and second payments and shouldn’t or don’t need to include this information on their 2020 tax return.”
Anyone who didn’t receive a first or second stimulus check last year, the IRS goes on to explain, or who got checks for amounts less than they should have, may be eligible for the 2020 Recovery Rebate Credit. And they have to file a 2020 federal tax return in order to claim that credit, even if they don’t normally have to file a tax return.
The credit is a way to correct, on the back end, any error in peoples’ stimulus check disbursements so that they receive the full financial benefit from the government’s myriad coronavirus-related emergency legislation. For any taxpayer who is eligible for this credit, the IRS says that amount will be reduced by any stimulus checks already issued to them, so be aware of that.
“If there’s a mistake with the credit amount on Line 30 of the 1040 or 1040-SR, the IRS will calculate the correct amount, make the correction and continue processing the return,” the IRS’ new announcement continues. “If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change.”
These are some of the most common reasons why the IRS says it has needed to correct people’s Recovery Rebate Credit amounts on their tax returns so far:
- The individual was claimed as a dependent on someone else’s 2020 tax return.
- The individual did not provide a Social Security number valid for employment.
- A qualifying child listed as a dependent for purposes of the stimulus payments was age 17 or older on January 1, 2020.
- Math errors relating to calculating adjusted gross income and any stimulus amounts already received.
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