Supplemental Stimulus Check: 2020 Tax Filers May Get A Surprise Plus-up Payment From The IRS

Stimulus Check
Stimulus Check

The IRS has sent out around 165 million stimulus checks to individuals, including a million sent in the latest round. The total value comes to $388 billion since the bill was signed by President Biden on March 11, 2021. And many more are expected to roll out as people rush to file their 2020 returns before the May 17 deadline

A significant number of the checks sent are plus-up payments. The latest round includes 460,000 such payments. These supplemental payments go out to taxpayers who have already received their third stimulus check.

Grounds For A Plus-Up Stimulus Check

There are several reasons for sending the plus-up payments. One of the main reasons is that the initial checks were sent based on 2019 returns. If you have filed your 2020 returns after you received the initial stimulus check, you must have received a second catch-up payment.

The payments are the difference between the amount a person received and what the tax filer would be eligible for under revised criteria.

If you had a fall in income in 2020, that could have qualified you for a plus-up payment. The other reason could be the addition of dependents in your family. The birth of a child could also entitle you to an additional catch-up payment.

The plus-up payments were processed starting April 9 and the first round hit accounts starting a week later.

Stimulus Check To Veterans

stimulus check
stimulus check

The veterans received their stimulus checks later with the first batch starting April 14. It was due to delays in finalizing their list. A total of 320,000 payments went out, valued at $450M. Most veterans and retired railroad workers receive pension and compensation benefits but do not need to file tax returns. Many also did not avail of the non-filers tool uploaded by the IRS last year.

Such veterans who filed their 2020 tax returns got their records updated and received the full payment based on fresh calculations. Close to 850,000 people received their stimulus checks with a value of around $1.6B.

Payments to both groups, initial and plus-up recipients, will continue simultaneously. With the revised date for filing tax returns ending on May 17, there will be a fresh cased for sending out plus-up stimulus checks.

An Extended Closing Date For Sending Stimulus Checks

The IRS has an extended timeline for sending out the third stimulus checks. This will allow them to process the last-minute pile-up of tax returns filed on the last day of the May 17 deadline.

The clash in dates with the tax deadline will delay for some time the sending out of first and supplemental stimulus checks. It could momentarily disrupt the stimulus check distribution process.

This extended date has caused a knock-on effect for the plus-up payments, as they are based on the latest tax filings for 2020.

Claiming For A New Dependent Based On 2020 Returns

Stimulus Check
Third Stimulus Check

All three stimulus payments had provisions for dependent children, though the third stimulus check is more inclusive. But for the first time, the tax season clashed with the stimulus payments.

So people who welcomed a child into their home in 2020 would not have got the opportunity to add them to the list of dependents.

Under the third round of stimulus check or the American Rescue Plan, eligible families can get up to $1,400 per dependent. So a couple with two children can get up to $5,600 if their income is within the stipulated limits.

For the first time, children over 17 years can also avail themselves of the additional amounts. So a child added to your family will qualify you to an additional $1,400 max.

But as mentioned, your adjusted gross income should be within the permissible limits.

A Fall In Income In 2020

Your 2020 might make you eligible to receive some stimulus money through a plus-up payment.

If you earned more than the threshold limit based on your 2019 tax returns, you were not entitled to any stimulus check.

Let’s say your income goes down to $70,000 and you file individually. So you get the maximum amount of $1,400 as a plus-up payment.

Most Americans reported a fall in income in 2020 as the economy went into a tailspin due to the pandemic.

And the only way to report a fall in income is through filing the latest tax returns.

If you have filed your tax returns in the final weeks of the extended deadline, you will have to wait for your stimulus checks.

A Backlog Of Stimulus Checks

The IRS will take some time to work its way through the backlog caused by the last-minute rush to file tax returns, with the May 17 deadline looming.

The IRS will gradually discover in the coming days filers freshly eligible for the plus-up payments. They intend to keep up with the rush and continue making the supplemental payments based on a rolling basis.

The IRS will continue making both first and plus-up payments on a fairly regular basis.

It becomes fairly obvious that plus-up payments will not go out to everyone who received the third stimulus check. If you have received the full amount in the initial stimulus check, you are not entitled to a plus-up check.

Even if you have received your initial stimulus payment by direct transfer, you might get your plus-up stimulus payment by paper check through the US Postal Service. The payments will get a bit delayed and may take up to 4 weeks to reach you. You can track every movement using the free tool of the postal service.