The Internal Revenue Service and U.S. Treasury have announced via their latest update that more than twenty-five million coronavirus stimulus checks worth $36 billion have been disbursed this week to cash-strapped Americans.
To date, this fourth batch of stimulus checks now brings the total number of payments to one hundred fifty-six million worth approximately $372 billion, according to the agencies. In all, about 85 percent of stimulus checks sent so far have been direct deposited in bank accounts, the IRS noted.
What’s notable about this particular batch is that it is the first one that includes “plus-up” or supplemental payments for those who only received partial $1,400 payments on an earlier date.
“This batch includes the first of ongoing supplemental payments for people who earlier in March received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns,” the IRS said in a statement. “These ‘plus-up’ payments could include a situation where a person’s income dropped in 2020 compared to 2019, or a person had a new child or dependent on their 2020 tax return, and other situations.”
Payments were also issued to those who recently filed tax returns in order to qualify for the stimulus money, due to the fact that the IRS did not have their necessary information on record. These checks will continue to go out on a weekly basis going forward, according to the agency.
However, in what may seem like a wonderful cash windfall for many Americans, be aware that the actual sum of the “plus-up” payments might have the potential to disappoint.
First, in order to be eligible for the money, taxpayers have the option of claiming a correction on their 2020 tax return through the Recovery Rebate Credit—located in line thirty of Form 1040—for the first two stimulus payments. According to the IRS, that extra cash will be sent off along with the tax refund.
Second, if the agency already delivered the third stimulus check but the individual is entitled to a higher payment due to the 2020 tax return, the IRS will automatically adjust the total via the aforementioned “plus-up” check.
The problem, though, lies in the fact that if one filled out line thirty on Form 1040, the IRS will double-check that claim—and if there are indeed issues with that, the taxpayer might receive less money than anticipated. The agency will then send off a letter or notice explaining any changes to the final amount.
Another payment adjustment could occur if a child was claimed as a dependent on another individual’s 2020 tax return—which has the potential to happen among those who are divorced. The person who claims the child as a dependent on their tax return should receive the stimulus check but, further complicating the issue, it is known that some divorced parents alternate years when they claim their children as dependents.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.