The Internal Revenue Service (IRS) and Treasury have announced that they have delivered nearly 130 million Economic Impact Payments (EIPs, or stimulus checks) to Americans. More are on the way.
I know – and you know – that some Americans may have received a payment amount different than what they expected. The IRS has some explanations for why that might have happened. Here’s a rundown:
- You have not filed a 2019 tax return, or the IRS has not finished processing your 2019 return. If you filed a tax return for 2018 or 2019, you generally don’t have to do anything else to collect your payment. Typically, the IRS uses information from the 2019 tax return to calculate the amount of your check. If you haven’t filed for 2019, the IRS will use your 2018 return. It’s possible that you may have filed for 2019, but the IRS has not finished processing your return. In that case, the IRS will also use your 2018 return. Check your status carefully: a message telling you that IRS has accepted your e-filed tax return is different than confirmation of completing processing. And remember, returns filed by paper take longer to process (up to 4-6 weeks in the best times and I think we can all agree that these are not the best of times).
- Your family or financial situation has changed. If you’ve gotten married, had a baby, or changed jobs, the IRS may not have a record of those changes. That’s to be expected if those changes occurred in 2020, but even if they happened last year, if the IRS relied on your 2018 return, those changes would not be reflected in your payment (see again #1).
- Your dependent didn’t have a Social Security Number. A qualifying child must have a valid Social Security number (SSN) or an Adoption Taxpayer Identification Number (ATIN); a child with an Individual Taxpayer Identification Number (ITIN) is not eligible for an additional payment. Also, any qualifying child must be a U.S. citizen, permanent resident, or other qualifying resident alien.
- Your dependent was too old. Don’t confuse dependent with qualifying child: only children who are eligible for the Child Tax Credit qualify for the additional stimulus payment of up to $500 per child. That means that you generally must be related to the child, live with them more than half the year, and provide at least half of their support. Eligible children may include your own children, foster children, younger siblings, grandchildren, nieces, and nephews if they can be claimed as dependents. The child must also be under the age of 17 at the end of the year for the last processed tax return (see again #1). Even though a parent may claim older children – like college students – as dependents, those children do not qualify for the additional $500 payment if they are age 17 or older. It’s also the case that if a taxpayer claimed a parent or any other relative age 17 or older on their tax return, that dependent would not receive a $1,200 payment. However, if a child, parent or other relative cannot be claimed as a dependent on anyone else’s return for 2020, they may be eligible to claim a $1,200 credit on their own 2020 tax return.
- Your ex or significant other claimed the child. Unmarried parents who do not file a joint return cannot both claim their qualifying child as a dependent. According to the IRS, the parent who claimed the child on their 2019 return may have received an additional EIP for their qualifying child. When the parent who did not receive an additional payment files their 2020 tax return next year, they may be able to claim up to an additional $500 per-child amount on that return if they qualify to claim the child as their qualifying child for 2020.
- Past-due child support was deducted from the payment. The only reason that a stimulus check should be offset is past-due child support. For taxpayers who file jointly and filed an injured spouse claim with their 2019 tax return (or 2018 tax return if they haven’t yet filed a 2019 tax return), half of the total payment will be sent to each spouse. Only the check of the spouse who owes past-due child support should be offset. However, the IRS is aware that a portion of the payment sent to a spouse who filed an injured spouse claim with his or her 2019 tax return (or 2018 tax return if no 2019 tax return has been filed) may have been offset by the injured spouse’s past-due child support. The IRS is working to resolve this issue as quickly as possible. If you filed an injured spouse claim with your return and are impacted by this issue, you do not need to take any action: the injured spouse will receive the unpaid half of the total payment when the issue is resolved.
- Garnishments by creditors reduced the payment amount. While there’s no mechanism for offsets other than child support for the EIP, your check is not protected from garnishment by creditors by federal law once the proceeds are deposited into your bank account. It’s possible that your payment could be seized after it has been deposited to resolve other liabilities.
If your payment is smaller-than-expected, and it’s a mistake, you may be able to “fix” it early next year when you file your 2020 federal income tax return. This could include up to an additional $500 for each qualifying child not reflected in your check.
Remember that the checks are technically advances of a new, temporary credit for 2020. Since we haven’t filed for 2020 yet, the IRS will “advance” your check based on your most recently filed tax return (2018 or 2019 tax return, as noted above). However, the amount is NOT taxable and it will not affect your “normal” refund in 2020, nor how much you owe.
You can find out more about stimulus checks – including answers to some of your most popular questions – here.