The IRS has a message for people 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 — under the guidance of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which represented the first round of incentive payments going to most were sent. American households. As of December, it also sent more than 147 million payments for the second round of checks, bringing in $600 for each eligible adult and child.
To be sure, Congress is currently negotiating a new round of stimulus, which could lead to…. If that $1.9 billion bailout is approved by lawmakers, it could be signed by President Joe Biden by the end of March, Wall Street analysts say. In that case, the IRS would be empowered to issue a third round of checks. So far, the IRS has been authorized to send two checks — and it said all those payments have been wired or deposited into bank accounts.
In total, the IRS has paid out more than $410 billion in so-called Economic Impact Payments, emergency aid to help people get on their feet during the crisis., to US 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 a bank account or don’t earn enough money to file tax returns.
Those issues have complicated the distribution of stimulus checks because the IRS relies on an individual’s most recent tax return to determine eligibility for the payments, as well as determine where the money should go.
“That was a big deal — those people who do qualify but didn’t file returns,” and so aren’t on the IRS’s radar, said Jody D’Agostini, a certified financial planner at Equitable Advisors. Some of the people who missed out are the ones who probably need the stimulus money the most, she added.
While the IRS said all checks have been issued, it added that some checks could 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’ll have another chance to claim the money when you file your 2020 tax return, according to the agency.
“If individuals haven’t received payment — or if they haven’t received the full amounts — they may be eligible for the Recovery Rebate Credit and will be required to file a 2020 tax return,” the IRS said in a statement.
That could happen if someone’s income fell in 2020, as the millions of Americans experienced last year who were laid off or lost their jobs. “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,” D’Agostini said. Those people can claim the payment by filing a 2020 tax return.
The IRS has come under fire from some critics over the distribution of the stimulus payments, with state taxpayer attorney Erin M. Collins suing the agency for failing to ensure the checks reached all eligible people. Households that haven’t received their checks are “probably in financial trouble right now,” Collins wrote in a report to Congress last month.
According to her, taxpayers won’t have to wait to file their 2020 tax returns in early 2021 to receive their payments. Unfortunately for those who missed it, the IRS offers no other option for now. It said people who either 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 missing incentive payments you need to claim on your 2020 tax return.
The IRS, which began accepting tax returns on Feb. 12, calls the checks “clawback discounts” on its tax forms. That’s because, technically, the payments were actually tax credits paid prior to filing your taxes. Most taxpayers have until April 15 to file their taxes, although the IRS said on February 22 that Texas residentsdue to the winter storms that ravaged their state.
To help determine if you owe more, the IRS has published a recovery discount credit worksheet that asks questions about eligibility (such as your income) and how much you’ve received so far in the two stimulus checks. If you find that you owe more, you can enter the amount on line 30 on IRS Form 1040.
If you do not remember how much you received in the first two rounds of stimulus payments, you can create your account or view it on the IRS website. Additional incentive money will be included with your tax refund. Most taxpayers get their money back within 21 days, according to the tax authorities.
Now that Congress is working on a, millions of households could receive a third stimulus check within weeks, which just happens to fall in the middle of tax filing season.
People who lost income in 2020 or had a baby last year may want toto ensure they receive the correct amount at their next stimulus check. Otherwise, the IRS may rely on your 2019 tax returns to determine your eligibility.
If that happens, people may have to wait one more time until they can update their information with the IRS and claim their additional incentive money.