According to the IRS figures, as of April 17, nearly 88 million individuals have received stimulus payments worth almost $158 billion in the program’s first three weeks. That number is more than half of the 150 million payments expected to be distributed.
Stimulus checks are $1,200 per adult – or $2,400 for married couples filing jointly – and an additional $500 per child, subject to income limits.
It should be the case that, for individuals who have filed 2019 or 2018 tax returns, the Internal Revenue Service (IRS) has a record of dependents listed on those returns. But what about non-filers? They’re entitled to those same benefits. Those include individuals with incomes below the filing threshold, and those whose source of support is Social Security benefits, Railroad Retirement benefits, Veterans’ Compensation, and Pension benefits, and Supplemental Security Income (SSI). Those folks are getting their $1,200 check but without a filed tax return, the IRS has no way of knowing who has one or more qualifying children and is eligible to receive the additional $500 child benefit. That’s why the IRS created the Non-filer Tool.
According to National Taxpayer Advocate Erin M. Collins, this caused the IRS to face “a Hobson’s choice”: hold up all payments while confirming possible dependents, or provide a short window of time to allow a small number of Social Security recipients (possibly 2% or less) the opportunity to provide the information before issuing all payments to this group of individuals. The IRS chose the second.
On Monday, April 20, the IRS issued a “special alert” stating that non-filers who receive Social Security retirement or disability benefits (SSDI), or Railroad Retirement benefits, would have to enter dependent information into the non-filer portal by Wednesday, April 22, to receive the $500 child benefit. Since the deadline has passed, by law, the additional $500 per eligible child has to be paid in association with filing a tax return for 2020. This group can no longer use the Non-Filers tool to add eligible children.
Those who receive Supplemental Security Income (SSI) or VA benefits have until May 5, 2020, to add children. SSI and VA recipients who receive Compensation and Pension (C&P) benefit payments should receive their automatic payments by mid-May.
Taxpayers with Direct Express accounts have a particular challenge: You may use the Non-Filers tool, but you cannot receive your and your children’s payment on your Direct Express account. You may only select a bank account for direct deposit or leave bank information blank and receive the money by mail.
Those who miss the window will likely have to wait until next year to receive the $500 child benefit by filing a 2020 tax return during the 2021 filing season. That concerns the NTA since “[I]ndividuals with incomes below the filing threshold are not in the habit of filing tax returns and some will not think to do so.” If they don’t, it means they won’t receive the child benefits next year either. According to Collins, “Some may simply not know they need to file a return, and others may not know how to proceed; another group of taxpayers may not be aware of free tax preparation options or may not want to bother with hiring and paying a preparer.”
As a result, the National Taxpayer Advocate is actively encouraging the IRS to continue to evaluate the possibility of making a separate payment of EIP child benefits to qualifying individuals this year.
For more help, the Taxpayer Advocate Service (TAS) has introduced a tool for taxpayers who know they qualify for a payment and want to know what steps, if any, need to be taken. If you have additional questions, you can visit the Taxpayer Advocate Service Coronavirus (COVID-19) Tax Updates webpage.