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IRS may adjust stimulus check money owed when filing your tax return

The IRS is mailing letters to taxpayers who claimed the 2020 Recovery Rebate credit and may be getting a different amount than they expected.

WASHINGTON — Some Americans who didn't receive their first or second coronavirus stimulus check may wind up getting less than they expected when requesting the credits on their 2020 tax returns. 

The IRS explained Monday that it would be mailing letters to taxpayers that may be getting a different amount than what they expected when filing their taxes.

The first and second round of stimulus checks were advance payments of a 2020 tax credit and most eligible people already received their money automatically. But for those who are eligible and didn't get the money, they were encouraged to claim the 2020 Recovery Rebate Credit while filing their tax return.  

The IRS explained that when it processes a tax return claiming the credit, the agency determines the "eligibility and amount of the taxpayer's credit based on the 2020 tax return information and the amounts of any Economic Impact Payment previously issued." The IRS added that if "a taxpayer is eligible, it will be reduced by the amount of any Economic Impact Payments already issued to them."

The agency said that if there is a mistake with the credit amount (found on line 30 of the 1040 or 1040-SR), the IRS will calculate the correct amount. It will then make the correction and continue processing the return. It said if there is an error that needs to be corrected, it might cause a slight delay in processing the return.

Here are some common reasons the credit would be corrected, according to the IRS:

  • The individual was claimed as a dependent on another person's 2020 tax return
  • The individual did not provide a Social Security number valid for employment
  • The qualifying child was age 17 or older on January 1, 2020
  • Math errors relating to calculating adjusted gross income and any EIPs already received

Any taxpayer that receives a notice about the changed amount of their Recovery Rebate Credit should read it, then review their 2020 tax return and Form 1040 and Form 1040-SR instructions.

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The first and second stimulus checks were available to anyone with an income of $75,000 or less for individuals or $150,000 or less for married couples. The first check was $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child. The second stimulus check was $600 ($1,200 if married filing jointly) plus $600 for each qualifying child.

The IRS said anyone with an income of $72,000 or less can file their 2020 federal tax return electronically for free through its file program.

Most of the stimulus checks were sent to Americans via direct deposit or as a prepaid debit card. The Recovery Rebate Credit is the last chance for taxpayers to receive their stimulus money.

Click here for more information about the corrected Recovery Rebate Credit issues after the 2020 tax return is filed. The IRS said that this is only for individuals who haven't received their first or second stimulus check, not the third.

The IRS said those who receive a letter and disagree that they calculated the 2020 Recovery Rebate Credit wrong should review the info on the agency's website before contacting the IRS. 

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