If you have received less than what the government has given out in the Economic Impact Payments, then you can expect a ‘plus-up’ stimulus check to compensate for it. The IRS has also cautioned the people to not expect much from it.
The IRS has started sending out the additional checks that will help make up for the difference between what was due after the payment of the three stimulus checks starting in the middle of last year. The extra amount has been calculated as the IRS has processed the latest tax returns for 2020 filed this year.
Many people will have received the extra amount by today if it was a direct account deposit, while others will be getting it by mail through paper checks or debit cards, which was revealed on Wednesday by the IRS. An estimated 25 million-plus payments officially dated April 7 were dispatched. But only a million of the payments were ‘plus-up’ payments.
The reasons for which you might receive a stimulus check are varied. For instance, if you have welcomed a baby into the household in 2020, you might have missed out on the payment for the dependent child as all your previous payments were based on your 2019 returns, filed much earlier. This information was received by the IRS only with your 2020 tax returns.
How To File For Pending Stimulus Payments?
The IRS has also allowed people to claim any pending stimulus payments through a couple of ways.
The first is through the RRC, which is a correction on Line number 30 in Form 1040. This is for claiming some pending amount of the first two checks. This amount will be adjusted against your refund.
But if the authorities have already sent out your stimulus payment based on the latest return for 2020 filed in 2021, the IRS may take recourse to a ‘plus-up’ check. This will typically happen to middle and upper-income groups who might have faced a severe drop in income in 2020 because of the COVID -19 pandemic. This would have greatly reduced their income and entitled them to a larger amount in their third stimulus check.
Calculating the amount that you are entitled from the three stimulus checks is complicated. It will also require your active participation. This includes filing tax returns by people who do not normally need to do so.
They should claim the money due for the previous two stimulus checks through the ‘RRC.’ This will also help the IRS with the details required to calculate the amount and also send it to the right address based on the updated information submitted along with the 2020 tax return.
Filing your tax returns in 2021 thus becomes mandatory in a way as it will enable you to claim a ‘Recovery Rebate Credit.’
But there is a reason your stimulus checks might decrease if you owe the government or certain state agencies. Debts owed by state and federal agencies will be deducted from the ‘plus-up’ payments that the people will receive. But any previous debts under the head of federal income tax will not be taxed effective March 18.
Is Your Check Of A Lesser Amount Than Expected?
You might get less than what you expected from your Recovery Rebate Credit. Any filing filled out in Line number 30 on Form 1040 will be crossed-checked by the authorities. If it throws up anything, your check will be calculated accordingly. And you might end up getting less than expected.
You will receive a letter from the IRS explaining the reason for the change. But the glitch will delay the processing of the return.
The different methods of processing the payment to dependents in the first two rounds are places where there might be differences in the calculation methods. For example, the payout for each eligible dependent was $500 in the first round, $600 in the second, and $1,400 in the third round for each child. Older dependents are also eligible for the $1,400 check in the third round this year.
The cutoff date for dependents was 17 in the initial rounds as there were no provisions for paying older dependents. But eligible dependents regardless of age will get $1,400 in all instances, the amount will be added to the stimulus amount received by the person claiming the amount.
The discrepancy in calculating the ‘plus-up’ payment will arise if individuals and families claim the additional $500 and $600 for the previous two rounds of stimulus check for each dependent, but the child had turned 17 years on January 1, 2020. In such a case the filer is not eligible for the additional $500 or $600.
The next shortfall will likely occur if the child has already been entered as a dependent in a different person’s tax return for 2020. This is highly possible among divorced parents, for instance. The person claiming the child is eligible for the additional stimulus amount. But the issue is further complicated when parents claim the child as dependent on alternate years. The parent claiming the child as a dependent on the 2020 tax return is eligible for the adjustment in the RRC, as per the update in the website, 1040.com
Simple Computation Errors Can Lead To Lower Amounts
Other reasons can drag down the amount you receive from the IRS. Simple computational errors can affect the amount of your ‘plus-up’ payment. Any errors in calculating the Adjusted Gross Income will change the amount in your check. The AGI is used to determine your eligibility as an individual, head of household, and as one-half of a married couple filing jointly. The maximum income permissible for getting the maximum stimulus check of $1,400 is based on that threshold.
Don’t Forget To Include Your Social Security Number
If you fail to provide a Social Security number that is valid for employment, you will not be eligible for additional money despite filing for the RRC. The reason was that having a Social Security number was mandatory to receive a stimulus payment in the first two rounds, and the rule still stands. This provision excluded many immigrant families in 2020.
But the rule is different in the third round as parents with only an ITIN number were eligible for the stimulus payment if the child had a Social Security number. This is prevalent among immigrant families and other non-citizens.
The IRS has mailed about 156 million stimulus checks in the latest round. This round, worth approximately $36 million, was aimed mostly at low-income citizens who are non-filers, including 19 million stimulus checks for SSI recipients. It included 1M “plus-up” amounts. The very first round, for instance, paid $500 per dependent below 17. The next check gave $600 per child under 17, and the latest check – the biggest – pays $1,400 for any dependent, notwithstanding age. However, mistaken claims related to wrong birthdays of children shall account for immediate disqualifications.