Have you received your $600 COVID-19 economic impact payment (EIP)?
If not, then you're probably doing the same thing as Purcival Fairweather. You're checking, double checking and rechecking yet again your bank account to see if the coronavirus cash is finally there.
$600 check? More like check my account 600 times.— Purcival Fairweather 🍾 (@purcival) January 2, 2021
But your obsessive bank badgering won't have to go on very much longer.
If your EIP doesn't arrive by Jan. 15 or shortly thereafter it's sent out as a debit card or paper U.S. Treasury check, then you're not getting it. At least not automatically.
You'll have to claim the payment, which technically is an advance tax credit, when you file your 2020 tax return this year.
It's the law, not the IRS' decision: And no, don't go blaming the Internal Revenue Service, which again is in charge of distributing COVID-related payments.
The distribution deadline actually is in the bill that was signed into law on Dec. 27, 2020:
So far, the IRS has acted quickly, with EIP issuance beginning on Dec. 29. Yes, some people got their money before the New Year arrived. My earlier post, 8 Q&As about the $600 COVID-19 payments that already are on their way, has more on these much-anticipated deliveries.
But don't hate the players or even the process. If you don't qualify for money in this second round of payments — or if you didn't get any or all of the first (and larger) amount delivered last summer — just get ready to get what you're due.
How? By claiming the COVID-19 cash on your 2020 tax return that you'll file this year.
Why you didn't get a check: First, though, here's a quick review of why you didn't get any or as much money as you expected in either COVID-19 EIP situation.
Even though the stimulus check or economic impact payment or rebate amount — yes, this second batch is officially referred to as Recovery Rebates in the newest law — technically is an advance tax credit for the 2020 tax year, the IRS used prior filing data to calculate how much to send taxpayers. They did so to get the cash into eligible recipients' hands as soon as possible.
Individuals who get certain government payments, such as Social Security or Veterans' benefits, also got the funds automatically. And folks who didn't have to file returns but registered using the IRS' online nonfilers tool also got in the EIP delivery line.
The IRS is using the info from that first batch of economic impact payments to distribute this latest round.
And they're not asking (or letting) folks register online to get this second payment. Why not? Because with the Jan. 15 delivery deadline bearing down, there's just not enough time to process such added requests.
Remember, too, that the timetable is particularly tight because the IRS also is working to get ready to open this year's tax filing season.
Why you might need to claim added relief money: The starting date of the 2021 tax filing season is particularly important to folks who didn't get any or only a part of either economic impact payment.
As noted, the amounts officially are a tax credit tied to your 2020 tax return. So if you made less money in 2020 than you did on your 2019 return that the IRS used to figure your payment(s), then you need to claim the amount you missed.
This is likely to a very popular claim on 2020 Form 1040s, as millions of folks lost jobs or at least had their hours and incomes reduced due to coronavirus closures. The same is true for folks who made too much money in 2019 to qualify for either rebate, but who in 2020 are under the EIP earnings' caps.
Other changes in your life in 2020 also could make you eligible for more relief money. This is the case if you didn't have any tax dependents in 2019, but welcomed a new baby to the family last year. That youngster should get you an added $500 under the first round created by the Coronavirus Aid, Relief and Economic Security (CARES) Act or another $600 for EIP 2.0 approved late last December.
And here's one other good thing about the payments when you do claim them on your taxes. A tax credit is a dollar-for-dollar offset of any tax you owe.
Plus, this EIP credit is the best king of credit. It's refundable, meaning that if you qualify for more of the credit than tax you owe, the excess comes back to you as a refund.
How to get missing EIP amounts: OK, so how do you get this great tax credit EIP you missed this year?
First, you have to wait for the tax filing season to start. IRS Commissioner Chuck Rettig last fall told Congress that he expects his agency, even with all the added COVID-related complications, to start the 2021 filing season on time.
That's generally been the last week of January. I'll let you know as soon as the IRS announces an official date it will start accepting and processing 2020 tax returns.
But before you (or your tax preparer) start working on those returns, you'll need to find the letter that came with details on how much you received. If you got a payment in connection with the CARES Act and another one in the second EIP round, you should have/get separate letters with the specifics for each.
These mailings, officially IRS Notice 1444, will help you compute how much more you're due in connection with your 2020 tax return filing. The Form 1040 instructions, which are being updated as I type, will have a worksheet. Your tax software, either that you use yourself or that your tax pro uses, also will work out the amount(s) for you.
Here's hoping that you got the maximum in both EIP rounds and don't have to mess with filing for more.
You should find out for sure by Jan. 15.
You also might find these items of interest:
- Tax software in 2021 filing season to offer multi-factor identity protection
- COVID relief 2.0 offers some donors a bigger charitable tax deduction in 2021
- IRS and FBI warn about business cyber scams that target COVID teleworkers
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.