This is what happens if a third stimulus check arrives during tax season

February 15, 2021 0 By boss

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The IRS could base your next stimulus check on either your 2019 or 2020 tax return.


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With one eye on the faltering US economy and the other on the ongoing pandemic, Congress is rushing to approve President Joe Biden’s $1.9 trillion stimulus package by the middle of March to get aid out to individuals and families as quickly as possible, including a third stimulus check of up to $1,400 per person. If House and Senate Democrats hold to that mid-March date for the new bill, the new stimulus payment will fall right in the middle of tax season: Right as it’s processing 2020 federal tax returns, the IRS will also be sending out the next wave of checks.

As if that’s not enough to put on the IRS’ plate, Congress may also require the agency to look at your 2020 tax forms if you’ve filed them to determine your payment. Doing so would give the IRS a better idea of your economic situation during the pandemic to judge your eligibility for a check. But what if you haven’t filed yet? And what if your third check never arrives or you get a smaller amount than you feel you should

We’ve got answers for you based on clues from the most recent proposal for a third stimulus check. However, we won’t know anything for sure until we can read the final language in a new bill. We’ll continue to update this story.

Why would your third stimulus check arrive during tax-filing season?

House Speaker Nancy Pelosi said she expects Congress to have a final bill ready for Biden to sign into law by March 14, which is when some unemployment benefits expire. If Congress follows that timeline (which it may, due to a legislative tool Congressional Democrats are using to push through Republican opposition), a third stimulus check could arrive during tax season, which lasts until April 15

This makes things a bit more complicated. For one, the IRS is already including make-up stimulus money from the first two checks with your tax refund this year. It also means the IRS will likely use whichever tax return they have on file most recently (more below.) 


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Will the IRS base your third stimulus check on your 2019 or your 2020 taxes?

The most recent Democratic proposal (PDF) states the IRS would determine your total third stimulus payment based on your adjusted gross income (AGI) from either your 2020 or 2019 tax returns — whichever the IRS has most recently on file at the time of 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). 

The IRS is now accepting 2020 tax returns. We recommend filing your taxes as soon as possible for several reasons. 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 you your third stimulus check to you faster

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With tax returns and third stimulus checks potentially occurring at the same time, the IRS could have its hands full.


Angela Lang/CNET

What if you made more money in 2020 but the check is based on your 2019 taxes?

The most recent proposal (PDF) says the following: 

Taxpayers receiving an advance payment that exceeds their maximum eligible credit based on 2021 tax return information will not be required to repay any amount of the payment to the Treasury. If a taxpayer’s 2021 tax credit exceeds the amount of the advance payment, taxpayers can claim the difference on their 2021 tax returns.

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.

On the other hand, this also means that if you qualify for the full stimulus payment based on your 2019 taxes, but do not 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 your third stimulus check doesn’t arrive or money is missing? 

Once a final bill is approved, 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, or non-filers not taking an extra step to get the IRS their information.

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, even if you don’t usually have to file one.

For more, check out what we know so far about a third stimulus check and who we think will be eligible this time around.

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