money Stimulus checks: IRS will correct miscalculated payments claimed on tax returns
The Internal Revenue Service will automatically correct miscalculations taxpayers make when claiming their first and second stimulus checks on their 2020 tax returns, the agency said Monday.
"If there's a mistake with the credit amount...the IRS will calculate the correct amount, make the correction, and continue processing the return," the IRS said in a press release on Monday. "If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change."
Those who were eligible for a stimulus check but didn't get one or didn't get the full amount can claim the payment as a Recovery Rebate Credit (RRC) on their 2020 federal tax return. The credit applies to both the first round of $1,200 stimulus checks sent last spring and the second round of $600 checks distributed in January.
When the IRS processes a return claiming the credit, the agency first determines the taxpayer's eligibility and then the amount they are entitled to based on their 2020 tax information. The IRS then subtracts any stimulus payment amount already issued to the taxpayer.
Taxpayers will get a notice if the IRS changes the amount of their 2020 credit from what the taxpayer calculated when filing their return. This may occur if the individual was claimed as a dependent on another person's 2020 return, if no Social Security number valid for employment was provided, or if a claimed child dependent was 17 or older on January 1, 2020, as well as math errors when calculating gross income.
The IRS is urging taxpayers to first properly determine their eligibility for the credit before filing their 2020 tax return. Taxpayers have until May 17 to file their federal taxes.
Read more: Here's what to do if you haven't gotten your stimulus check
Taxpayers who had significant life changes may want to look into the credit. For instance, parents who welcomed a baby in 2019 or 2020 may be able to claim the additional money available for dependents.
College students and other young adults may be eligible for the payments if their parents don't claim them as a dependent on this year's tax returns, but did so in previous years
A change in income could also make you eligible for the credit. For example, if you lost your job or experienced an income drop in 2020, you may qualify for the payment or a bigger check than the one you got.
If you were eligible but never received your payment because you changed your address or the IRS didn't have banking information on file, you can also claim the credit.
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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