6 stimulus check pitfalls to know about during tax season
Millions of people have to claim missing stimulus check money on their taxes this year. But now everything's changed. Here's the story.
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While upfront it seems simple, there are major ways the rules have changed, between the IRS sending out checks proactively and you having to claim your payment as part of a tax rebate. These circumstances could block you from getting your missing stimulus money on time, or prevent you from getting it at all. Here's what you need to know right now about exceptions that could trip up your claim. (And here are details about a third stimulus check for up to $1,400, including how soon yours could come, and how tax season could affect your third check total.) This story was recently updated.
The IRS has to process your taxes before you get any money
Once you file your taxes with your Recovery Rebate Credit form, you'll have to wait for the IRS to process your tax refund. If you file for the credit and are owed money, you'll either see the amount of your tax refund increased or the amount of tax you owe reduced, depending on the amount of stimulus money you're eligible to receive.
You can still claim missing stimulus money through a Recovery Rebate Credit if you file your taxes with an extension, but keep in mind that this means your refund will arrive correspondingly later. For example, if you wait until Oct. 15 to claim it, the earliest you would get the money is Oct. 22.
You may not get a check at all if you owe money to the IRS
However, these rules are different when you file for missing stimulus money on your 2020 tax return. For certain outstanding debts -- including past-due child support and unpaid student loans -- the IRS can withhold some or all of your unpaid stimulus payment issued as a Recovery Rebate Credit when you file your taxes. An independent taxpayer advocacy group within the IRS is working with the agency to address this issue. (Find out more about your stimulus check rights.)
If you do owe the IRS money, you may be wondering: Should I bother filing for a Recovery Rebate Credit if the agency is going to take my money away? It likely still makes sense for you to do so, because it will help you pay down your debt -- even if you won't be able to access those funds as the laws intended.
Your stimulus check could be garnished, even if you're claiming it due to an error made by the IRS
This is due to a limitation that subjects Recovery Rebate Credits to regular rules for unpaid federal taxes and certain other debts, so the credit is treated differently from the stimulus checks paid up front.
Any error involving your third check means you'll have to wait until tax season next year to claim missing money
Much like 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. 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.
If you're able to file your taxes before the April 15 deadline, it can mean quicker turnaround for your refund, if one is due to you. In addition, any potential missing stimulus payments are also tied to your taxes this year, so filing sooner would mean a tax refund as well as a stimulus check in one payment. It's also more likely you'll get your full payment with the new stimulus check in 2021 because the IRS would base your third stimulus check on your 2019 and 2020 taxes, according to the latest proposal which isn't law yet.
If you don't have direct deposit set up with the IRS, setting it up when you file your taxes can mean seeing your refund sooner -- especially if you combine it with electronic filing. The IRS has actually asked taxpayers to avoid filing paper returns if possible as well, to safeguard against further delays.
If you've moved recently or you're planning to move, you'll need to inform the USPS and the IRS of your new address, even if it's temporary. Keeping your address information up to date helps to ensure that you receive all your stimulus checks -- the potentially missing ones too -- as well as your tax refund.
For more details, check out everything we know so far about a third stimulus check, when it might arrive and how much money you could get.