The IRS could base your next stimulus check on either your 2019 or 2020 tax return.
President Joe Biden officially signed the $1.9 trillion stimulus package into law on Thursday, one day sooner than originally planned. The payments for the third stimulus checks of up to $1,400 per person will start going out this weekend, in the middle of tax season — which is already complicated this year. Tax season ends on April 15 (unless you file an extension), which means Americans will still be busy filing taxes when the checks start coming in.
Now that tax season and the third stimulus check are merging into the same time slot, you’ve likely got many questions. Will your eligibility for the new payment be based on your 2019 or 2020 taxes? What if you didn’t file taxes in 2019 or don’t file a return before the new bill passes? What if your circumstances have changed since you last filed?
We help shed some light on these questions as we understand them now that a bill has been made law. Here also is how to track your payment and what we know about setting up direct deposit for your check. This story is frequently updated with new information.
Third stimulus checks will start arriving during tax season
The stimulus bill is now signed into law. And the third stimulus check will start getting out to some as soon as this weekend — right in the middle of tax season.
There are a few reasons why that makes things a bit complicated. For one, the IRS is already including makeup stimulus money from the first two checks with your tax refund this year. It also means the IRS will likely use whichever tax return it has on file most recently (more below).
Stimulus check 3: How much money you’ll get
Will the IRS base my third stimulus check on my 2019 or 2020 income?
The final bill (PDF) states the IRS would determine your total third stimulus payment based on your adjusted gross income, or AGI from your most recent tax return — either your 2019 or your 2020 return, if you’ve filed it this year in time for the IRS to determine your payment.
There may be several implications to this. For example, if you earned more in 2020 than in 2019, but the IRS uses your 2019 return (and gives you more stimulus money than you might be eligible for), you won’t have to return that money (more below). This is assuming you haven’t filed your 2020 taxes.
The IRS is currently accepting 2020 tax returns. We recommend filing your taxes as soon as possible. The earlier you file, the sooner you’ll get your tax refund (you can estimate the total here) and any missing stimulus money you claimed on your return. You’ll also have a chance to set up direct deposit with the IRS, or fix any errors, which could get your third stimulus check sent to you faster.
With tax returns and third stimulus checks occurring at the same time, the IRS could have its hands full.
What happens if you earned more money in 2020, but the IRS uses your 2019 tax return?
The IRS will use your 2019 taxes to determine your third stimulus payment, unless you file your 2020 return before the IRS processes the new check.
Therefore, if you qualify for the full $1,400 based on your 2020 taxes, but the IRS issued your check based on your 2019 taxes, you could claim the difference a year from now on your 2021 tax return — much like the current Recovery Rebate Credit for missing stimulus check money from the first two rounds of stimulus payments.
On the other hand, this also means that if you qualify for the full stimulus payment based on your 2019 taxes but don’t qualify based on your 2020 taxes and if the IRS used your 2019 return, you won’t have to pay the IRS back for that discrepancy.
What happens if the IRS never processed my 2019 tax return?
Due to pandemic-related delays, the IRS is still working its way through a backlog of paper tax returns from 2019. As of the end of January, there were 6.7 million individual income tax returns for 2019 that had yet to be processed, according to the agency. These processing delays could be due to a number of things, including a mistake, missing information, or suspected identity theft or fraud. If the IRS contacts you for more information, you should get a letter. Resolving the problem then depends on how quickly and accurately you get back to the agency.
However, the new bill specifies that a third stimulus check will be based on your 2019 or 2020 tax return — not your 2018 one.
The bill says:
On the basis of information available to the Secretary shall, on the basis of such information, determine the advance refund amount with respect to such individual.
If your 2019 tax return is still being processed, the best thing to do right now is to file your 2020 return electronically as soon as you can, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. But if the holdup in processing your 2019 return is due to a problem that also occurs on your 2020 return, your 2020 return may get slowed down, which could delay your payment, Holtzblatt said.
What to do if your stimulus payment never arrives or if money is missing
If you’re eligible to receive a third stimulus check, but yours never arrives by direct deposit, paper check or EIP card, you’ll likely have to take another step to claim that money. This happened to millions of people during the first and second round of payments for several different reasons, including IRS errors, out-of-date banking information or addresses and nonfilers not taking an extra step to get the IRS their information.
Much like with the first and second checks, you’ll be able to claim any missing money from the third check owed to you or your dependents during tax season next year, 2022. Yes, that’s a long way away. The best thing to do right now to make sure your third check does arrive on time is to file your tax return as soon as possible, even if you don’t usually have to file one.
For more, check out a timeline for when the third checks could go out, and how much money you could get.
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