This article was last updated on November 17
It was a pretty common sentiment a few months ago that the IRS had missed paying millions of people their $1200/$2400 economic stimulus payment and especially the $500 child stimulus payment. Many of these reasons are well documented and range from lack of staff availability to major system issues. While the IRS was able to work through many of the original issues and make payments, their longer term solution to address missing or incorrect stimulus checks was for those impacted to claim the missing or underpayments in their 2020 tax return as a refund, filed in 2021 (see expected 2020-2021 tax refund schedule).
The IRS has delivered about 160 million payments totaling approximately $270 billion (and, according to TIGTA, the IRS correctly computed the EIP amount for 98% of the initial 157 million payments that had occurred at the time of their report). There have been more than 200 million successful status checks on Get My Payment, and more than 14 million people have successfully provided their banking information to get their payment via direct deposit.IRS
While the IRS has extended the window for non-filers to claim their 2020 stimulus check, if you did not receive the full amount to which you believe you are entitled, you will only be able to claim the additional amount when you file your next tax return. This is being classified as a recovery rebate.
Recovery Rebate – Claiming your missing stimulus check payment in your 2020 Return (Filed in 2021)
Taxpayers can claim their missing stimulus payments as a recovery rebate credit on their 2020 tax return filed in 2021 if they didn’t receive a payment or if their payment wasn’t the correct amount.
When people file their 2020 taxes next year and they weren’t eligible for an Economic Impact Payment in 2020 (because their 2018 or 2019 income was too high), they may still be eligible for the Recovery Rebate Credit in 2021. The Recovery Rebate Credit is figured like the Economic Impact Payment, except the amounts are based on tax year 2020, instead of tax year 2019 or tax year 2018, information. The eligibility criteria are the same, and the maximum credit is $1,200, or $2,400 if married filing jointly, plus $500 for each qualifying child. This means anyone who received the full Economic Impact Payment amount during 2020 for both themselves and their qualifying children cannot get the credit again in 20201 (that would be double dipping!)
Claiming or fixing an incorrect stimulus check payment
The IRS has sent notice 1444, Your Economic Impact Payment, to eligible recipients (per their system records) that outlines their Economic Stimulus Payment details. You will need this notice when filing your 2020 tax return next year to claim any missing stimulus payments you were eligible for – which will be considered an additional tax credit known as a recovery rebate.
The credit can be claimed on either Form 1040 or Form 1040-SR. The 2020 instructions for these forms will include a Recovery Rebate Credit worksheet to help determine eligibility and figure the credit.
Do I Need to Pay Taxes on my Stimulus Check Payments?
Per the IRS, NO. The payment is essentially an advanced refundable tax credit so is not part of a tax payers gross income. Therefore it is not taxable and no income tax is due on this payment in 2021, when you file your 2020 tax return. If you are entitled to other credits and/or refund payments, this stimulus/economic impact payment won’t reduce your refund or increase the amount you owe either.
The stimulus check payment will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs. However the IRS will reduce the stimulus payment to offset past-due child support
Children born or adopted in 2020 or Change in Dependent status
You will also need to claim the $500 kiddie stimulus payment via your 2020 tax return if you had or adopted a child in 2020 or there was a change in dependent status since your latest IRS tax filing. All eligibility criteria still need to be met when claiming this. Also if your qualified child is only turning 17 this year you can still claim them.
The IRS will post additional guidelines on claiming your missing stimulus check payments in your 2020 tax return and I will post updates when available. I encourage you to subscribe below to get the latest updates.