There's been lots of news and information coming out about the Economic Impact Payments provided to eligible taxpayers for COVID-19 relief, including what you were to expect upon delivery. That amount might look a little different than you were first expecting, but there may be a very good reason why.
Over the last month, the IRS has provided over 130 million Americans with Economic Impact Payments (EIP), and more are on the way. Some people have noticed a different amount than they were first expecting, and you might be one of those people. If you haven't received yours yet, Wednesday is the last day to enter your info for direct deposit.
Here are some scenarios in which you may have seen a different EIP:
You have not filed a 2019 tax return, or the IRS has not finished processing your 2019 return
- Payments are automatic for eligible people who filed a tax return for 2018 or 2019
- If the IRS used the 2018 return, various life changes in 2019 would not be reflected
- These taxpayers may be able to claim an additional amount on the 2020 tax return they file next year
Claimed dependents are not eligible for an additional $500 payment
- Only children eligible for the Child Tax Credit qualify for the additional payment of up to $500 per child
- A qualifying child must have a valid Social Security number (SSN) or an Adoption Taxpayer Identification Number (ATIN)
- Parents who are not married to each other and do not file a joint return cannot both claim their qualifying child as a dependent
Dependents are college students
- Pursuant to the CARES Act, dependent college students do not qualify for an EIP
- If the student cannot be claimed as a dependent by their mother or anyone else for 2020, that student may be eligible to claim a $1,200 credit on their 2020 tax return next year
Claimed dependents are parents or relatives, age 17 or older
- If a dependent is 17 or older, they do not qualify the additional $500
- If a taxpayer claimed a parent or any other relative age 17 or older on their tax return, that dependent will not receive a $1,200 payment
Past-due child support was deducted from the payment
- The Economic Impact Payment is offset only by past-due child support
- Only the payment of the spouse who owes past-due child support should be offset
(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 with the Bureau of Fiscal Service and the U.S. Department of Health and Human Services, Office of Child Support Enforcement, 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 their unpaid half of the total payment when the issue is resolved. We apologize for the inconvenience this may have caused.)
Garnishments by creditors reduced the payment amount
Federal tax refunds, including the Economic Impact Payment, are not protected from garnishment by creditors by federal law once the proceeds are deposited into a taxpayer’s bank account.
What if the amount of my Economic Impact Payment is incorrect?
Everyone should be reviewing the amount they receive for an EIP. If you notice a discrepancy in what you thought you should be getting, there are a few things you can do.
Some eligible taxpayers with families may notice a smaller payment than what they thought they should get. In this case, they may qualify to receive an additional amount early next year when they file their 2020 federal income tax return. EIPs are technically an advance payment of a new temporary tax credit that eligible taxpayers can claim on their 2020 return. Everyone should keep for their records the letter they receive by mail within a few weeks after their payment is issued.
When taxpayers file their return next year, they can claim additional credits on their 2020 tax return if they are eligible for them. The IRS will provide further details on IRS.gov on the action they may need to take.
The EIP will not reduce a taxpayer’s refund or increase the amount they owe when they file a tax return early next year. It is also not taxable and is, therefore, should not be included in income on a 2020 return.
For more information on EIPs, here are some resources:
- Questions about eligibility, payment amounts, and status of payment
- Economic Impact Payments
- Get My Payment tool
- Chart of various payment amount scenarios