The IRS is reminding taxpayers that the Economic Impact Payment (EIP) amounts could be different than anticipated. Some Americans could have received a payment amount different than what they expected. EIPs vary based on income, filing status and family size.
The IRS described several common scenarios that may explain why the amount of the payment received might be different.
- Taxpayer has not filed 2019 tax return, or IRS has not finished processing 2019 return. The IRS typically uses information from the 2019 tax return to calculate the EIP, but will use the 2018 return if the taxpayer has not yet filed for 2019. If a taxpayer has already filed for 2019, the IRS will still use the 2018 return if it has not finished processing the 2019 return. If the IRS used the 2018 return, various life changes in 2019 would not be reflected in the payment, such as higher or lower income, or the birth or adoption of a child.
- Claimed dependent is not eligible for additional $500 payment. Only children eligible for the Child Tax Credit qualify for the additional payment of up to $500 per child. A qualifying child must have a valid Social Security number (SSN) or an Adoption Taxpayer Identification Number (ATIN). Further, parents who are not married to each other and do not file a joint return cannot both claim their qualifying child as a dependent. The parent who claimed their child on their 2019 return may have received an additional EIP for their qualifying child.
- Dependents are college students. Dependent college students do not qualify for an EIP. Also, even though their parents may claim them as dependents, college students normally do not qualify for the additional $500 payment. However, if a student cannot be claimed as a dependent by his or her parent(s) or anyone else for 2020, that student may be eligible to claim a $1,200 credit on their 2020 tax return next year.
- Claimed dependents are parents or relatives, age 17 or older. If a dependent is 17 or older, they do not qualify the additional $500. If a taxpayer claimed a parent or any other relative age 17 or older on their tax return, that dependent will not receive a $1,200 payment, and the taxpayer will not receive an additional $500 payment because the parent or other relative is not a qualifying child under age 17. However, a parent or other relative who cannot be claimed as a dependent on the taxpayer’s or anyone else’s return for 2020 may be eligible to individually claim a $1,200 credit on their 2020 tax return filed next year.
- Past-due child support deducted. The EIP is offset only by past-due child support. The Bureau of the Fiscal Service will send the taxpayer a notice if an offset occurs. Further, the IRS is working with the Bureau of Fiscal Service and the U.S. Department of Health and Human Services, Office of Child Support Enforcement, to resolve the situation where a portion of the EIP sent to a spouse who filed an injured spouse claim with his or her 2019 tax return (or 2018 tax return if no 2019 tax return has been filed) may have been offset by the injured spouse’s past-due child support.
- Garnishments. Under federal law, the EIP is not protected from garnishment by creditors once the proceeds are deposited into a taxpayer’s bank account.
The IRS asks taxpayers to review the eligibility requirements for their family. In many instances, eligible taxpayers who received a smaller-than-expected EIP may qualify to receive an additional amount early next year when they file their 2020 federal income tax return. EIPs are technically an advance payment of a new temporary tax credit that eligible taxpayers can claim on their 2020 return. Taxpayers should keep for their records the letter they receive by mail within a few weeks after their payment is issued. The EIP will not reduce a taxpayer’s refund or increase the amount owed when the taxpayer files a tax return early next year. Also, the EIP is not taxable, and should not be included in income on a 2020 return.
More information can be found at the IRS’s Economic Impact Payment Information Center webpage (https://www.irs.gov/coronavirus/economic-impact-payment-information-center).