COVID-19

Still Owed Stimulus Check Money? The IRS Can Make Adjustments When You File Your 2020 Taxes

by
Bob Mason
on
4/28/2021
Still Owed Stimulus Check Money? The IRS Can Make Adjustments When You File Your 2020 Taxes

When Congress made the historic decision to provide stimulus checks to the Americans most severely affected by the global pandemic, they were acknowledging that the crisis had led to real and significant economic harm. The first payment for $1,200 was approved almost immediately after COVID-19 began sweeping across the country, and then another $600 check was sent out at the end of 2020.  

Not everybody received the stimulus checks that they were owed, and as a result the IRS has created a new function – a recovery rebate credit – that people can use to claim their stimulus check. Taxpayers need to be aware that as the agency responds to those claims they will also be adjusting the amount that each taxpayer is owed in order to ensure that 2020 taxes are paid accurately.

The COVID-19 stimulus checks were meant to be paid directly to qualifying Americans. The CARES Act that was signed into law in March of 2020 was the first of the payments and the December payments were the second. An additional $1,400 per qualifying individual was authorized in 2021 and is still being distributed.

The new function is located on both Forms 1040 and 1040-SR on line 30 and is only applicable to the payments that were sent – or should have been sent – during 2020. The recovery rebate credit is specifically designed for those who expected to receive checks but didn’t, taking advantage of the fact that the majority of Americans will be filing their taxes. In fact, the department will also leverage information obtained from 2020 tax filings, which are due on May 17th, for distribution of the most recent stimulus checks.

Though taxpayers will be able to use line 30 to indicate the amount of stimulus money that they feel they are still due, that does not mean that the amount that they input is the amount that they will receive. The agency will go through the process of reviewing your 2020 tax return to determine whether you have calculated your taxes correctly. They will also review the payments that were sent to you to determine whether you were sent the appropriate amount or not. The agency will put all of this information together before determining whether you are owed money or not. The processing of credits may take some time, but the IRS will be sending out notices to anybody who has claimed a credit to let them know if the amount they claimed is what they will be receiving.

There are a few different reasons why the amount you believe that you are owed may not match the IRS calculations. One of the top reasons is that somebody else may have claimed you as a dependent on their return. However, there are also errors in calculation based on 1) math errors, 2) on a child turning 17 or older as of January 1, 2020, or 3) not having a valid Social Security number for employment (among others).

For more information on the recovery rebate credit, how to use it and what goes into the process, visit the special page that has been established on the IRS website. The agency has provided comprehensive explanation on why the credit that you are anticipating may not be what you receive. Reading the information provided will likely answer any questions that you may have.

If you are in need of assistance with preparing or filing your tax return, an experienced tax professional will be able to help, including assisting with claiming the recovery rebate credit and understanding exactly how much you are still owed by the government.

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Bob Mason

Bob Mason

Bob Mason is the founder of Coast Financial Services Inc. servicing both the Santa Cruz, and San Jose areas. Bob Mason is a skilled financial professional who is fully equipped to assist any of your accounting needs. Founding his firm in Santa Cruz, Bob understands the importance of small businesses and how they form the backbone of the area. Coast Financial Services, Inc. has been dedicated to the growth and profitability of businesses in Santa Cruz for 17 years. To learn more about Bob Mason and the rest of his team, visit their website.

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