Third stimulus check plus-up payments: What happens if the IRS owes you money – CNET

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The IRS based your third stimulus check on either your 2019 or 2020 tax return, depending on which was on file. But once your 2020 return is processed, it could change the amount you’re owed.


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The IRS is in the midst of sending out the third stimulus check to millions of eligible Americans. More than 130 million people have already received a payment for up to $1,400 per person in their household (track your payment through the IRS, or through USPS if you’re expecting a check by mail). But with the checks arriving in the middle of an already-complicated tax season, things can get confusing, fast.

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.) What if your circumstances have changed since you last filed, like if you earned less income in 2020, or if you had a baby

We’ve got the details you need, including who is immediately eligible for a “plus-up” payments from the IRS to correct any changes to stimulus money you’re owed based on your 2020 tax returns, and what happens if the IRS owes you a catch-up payment down the line. Also, here are 9 unusual stimulus check facts, what we know about a fourth stimulus check so far and brush up on qualifications for the $3,600 child tax credit.) This story has been updated with new information.

How is the IRS dealing with third stimulus check calculations when it comes to both 2019 and 2020 income?

The March stimulus bill states the IRS would determine your total third stimulus payment based on your adjusted gross income, or AGI from your most recent tax return — either your 2019 or your 2020 return, if you’ve filed the latter this year in time for the IRS to determine your payment.

There are 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). This is assuming you haven’t filed your 2020 taxes. 

And if the agency owes you more money based on 2020 taxes than 2019, then you may find you’re waiting for one of two things to happen. Either the IRS automatically sends a catch-up, or “plus-up” payment between now and the Dec. 31, 2021 deadline for sending stimulus checks, or you’ll have to claim the money later. 

The IRS is currently accepting 2020 tax returns through May 17, the new Tax Day deadline. If you’re expecting a tax refund hat includes missing stimulus money from the first two stimulus checks, we especially recommend setting up direct deposit with the IRS if you don’t already have it, so you get your tax refund back much sooner.


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Here’s what happens if the IRS owes you more stimulus money

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.

For people who did submit their 2020 taxes, the IRS is currently issuing plus-up payments to people who received their third stimulus payment in March based on their 2019 tax return, but are eligible for a larger payment based on their recently processed 2020 tax returns — basically, making up the difference in what you’re owed. These payments have already started going out for some, with a large portion of direct deposit adjustments issued around April 7. Plus-up payments will continue weekly, the IRS said

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.

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


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What happens if my plus-up payment never arrives? 

The IRS has until Dec. 31, 2021, to finish sending stimulus check payments, and that will include the catch-up payments for people who are still owes stimulus money. But if the automatic adjustment never arrives, what should you do?

The first thing is to make sure you know how much stimulus money you should expect, using our stimulus calculator as a baseline. If the amount the IRS tells you to expect differs greatly from the total the IRS said it gave you in a confirmation letter, you’ll need to keep an eagle eye out for payment adjustments. 

If the extra money never arrives, you may need to file a claim, either later in 2021 (if the IRS opens up an adjustment window) or potentially 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 of stimulus payments.

We’ve reached out to the IRS for more information on how long it could take to send out all of these supplemental payments, and what to do if your plus-up payment never arrives. We will update the story when we get more information. 

What about if the IRS uses my 2019 tax return, but I earned more money in 2020?

If you qualify for the full third stimulus payment based on your 2019 taxes but don’t qualify based on your 2020 taxes — assuming the IRS used your 2019 return — you won’t have to pay the IRS back for that discrepancy. Here are situations where you would need to return money to the IRS.

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If your circumstances changed in 2020, you may be owed more stimulus money from the IRS.


Sarah Tew/CNET

What to know if the IRS never processed your 2019 tax return

Due to pandemic-related delays, the IRS is still working its way through a backlog of paper tax returns from 2019. As of the end of January 2021, there were 6.7 million individual income tax returns for 2019 that had yet to be processed, according to the agency. These processing delays could be due to a number of things, including a mistake, missing information, or suspected identity theft or fraud. If the IRS contacts you for more information, you should get a letter. Resolving the problem then depends on how quickly and accurately you get back to the agency. 

However, the new bill specifies that a third stimulus check will be based on your 2019 or 2020 tax return — not your 2018 one. 

The bill says:

On the basis of information available to the Secretary shall, on the basis of such information, determine the advance refund amount with respect to such individual.

If your 2019 tax return is still being processed, the best thing to do right now is to file your 2020 return electronically as soon as you can, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. But if the holdup in processing your 2019 return is due to a problem that also occurs on your 2020 return, your 2020 return may get slowed down, which could delay your payment, Holtzblatt said. 


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What if my third stimulus payment never arrives, or if money is missing?

If you’re eligible to receive a third stimulus check, but yours never arrives by direct deposit, paper checkEIP card or Direct Express card (for example if you receive SSI, SSDI or veterans benefits), 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 and nonfilers not taking an extra step to get the IRS their information.

Much like with the first and second checks, you’ll likely be able to claim any missing money from the third check owed to you or your dependents during tax season next year, 2022. However, the IRS has yet to say if there will be an opportunity to claim missing money in 2021 instead. The best thing to do right now to make sure your third check does arrive 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 you should and shouldn’t do if you’re still waiting for your third stimulus check to arrive, and what we know so far about a potential fourth stimulus payment

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