Third stimulus check: who is getting extra money, why and how much?
The IRS is sending supplemental 'plus-up' payments to the stimulus checks already sent out for taxpayers that are newly eligible or that were due a larger stimulus check.
Over 130 million third stimulus checks have been sent out but depending on what changed between your 2019 and 2020 tax return, you may be eligible for an additional 'plus-up' payment from the IRS.
According to the IRS, on Wednesday another 25 million stimulus checks, worth $36 billion, were sent out in the most recent tranche of direct stimulus payments. Roughly 24 million of those payments were sent as direct deposit with the remainder sent as paper checks.
IRS sends out more 'plus-up' payments
There was much talk of a third round of stimulus checks they weren’t authorised until tax season was well underway. This meant that the IRS had to go off the information the agency had available when they issued the payments which could’ve been a 2019 tax return. As the IRS processes the millions of tax returns it’s receiving daily, the agency is adjusting for the difference between 2019 and 2020 filings.
The IRS is now sending supplemental 'plus-up' payments to the stimulus checks already sent out for taxpayers that are newly eligible or that were due a larger stimulus check. In the fourth batch of payments the tax agency sent out an additional 1 million of these payments. The IRS will continue to send out these supplemental payments weekly as it continues processing tax returns from 2020 and 2019.
Who is eligible for extra money?
A significant income decrease that sees your Adjusted Gross Income (AGI) fall below the income threshold should result in a 'plus-up' payment being issued. This would also apply for married couples who file jointly if their combined AGI was to fall to below $160,000, the upper threshold for the recent $1,400 stimulus check.
Whether you got your check or you're still waiting, you may be wondering: Will your eligibility for the new payment be based on your 2019 or 2020 taxes? What if you didn't file taxes in 2019, or haven't filed your 2020 return yet? (Unless you request an extension, you'll have to file by the new deadline of May 17.)
For those people who 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. This is assuming you haven't filed your 2020 taxes.
Those who are owed more money based on 2020 taxes than 2019, a couple of things could happen. Either the IRS automatically sends a catch-up, or 'plus-up' payment between now and December 31, 2021, the deadline for sending stimulus checks, or you'll have to claim the money later.
Why are people getting more payments?
In many cases, the IRS will have issued your check before it processes your 2020 tax return. If you filed your return and your circumstances changed in 2020 in a way that would bring you more stimulus money in this round, such as if you earned less income, or if you had a baby or added a new dependent, you may be owed a 'plus-up' payment from the IRS.
If you're owed a 'plus-up' payment, you shouldn't have to file an amended tax return or do anything else to claim it, other than file your 2020 tax return as soon as possible. The IRS should send it out automatically once it processes your new return, likely by direct deposit or by paper check, if you don't have your account details on file.
How much are people getting in the payment?
These additional payments are not limited to the most recent round of stimulus checks, and can be used to provide supplementary cash for any of the three direct payments. If someone who was above the income threshold for the $1,200 payment distributed last year, but who subsequently lost their job and fell below that threshold, they will now receive a retroactive payment.
'Plus-up’ payments might also be issued to households which have grown during the course of the pandemic. Anyone who gave birth or adopted children since filing their tax return last year will have an extra dependent to claim. Any new children in the household could trigger a ‘plus-up’ payment worth up to $1,400.