Three Stimulus Checks Aren't Enough: IRS is Sending “Plus-Up” Payments

Three Stimulus Checks Aren't Enough: IRS is Sending “Plus-Up” Payments

Even as the IRS was sending out these large numbers of stimulus payments, it was doing so based on outdated information. Now its attempting to remedy its original response.

 

With the IRS continuing to distribute payments as part of the third round of direct federal stimulus payments worth up to $1,400, the agency has now shifted its focus primarily to sending supplemental payments to those people who did not receive all of the money that they were eligible for when they initially received their stimulus payment.

To date, the IRS has sent out around 169 million third-round stimulus payments worth roughly $395 billion in total. The majority of these payments were sent out in the earliest batches of IRS payments, which remain the largest batches so far; the first, second, and fourth batches included roughly 90 million, 37 million, and 25 million payments, respectively.

 

Even as the IRS was sending out these large numbers of stimulus payments, it was doing so based on outdated information. The initial determination of eligibility for third-round stimulus payments was based on information contained in potential recipient’s 2019 tax returns, which at the time represented the most recent data available to the IRS. Many peoples’ situations have dramatically changed in the past year as a result of the ongoing COVID-19 pandemic with these changes reflected in 2020 tax returns.

As the IRS began receiving more up-to-date information in the form of 2020 tax returns, it also began to reassess eligibility for some people. To those people whose 2020 tax returns indicated a loss of income or a change in dependent status over the course of the past year that entitled them to a larger payment, the IRS began sending supplemental payments that the agency has been referring to as “plus-up” payments.

The distribution of plus-up payments has become a major focus for the IRS, with recent batches of stimulus payments including large numbers of supplemental payments. The most recent batch included 1.1 million plus-up payments out of a total of 2.3 million payments, worth roughly $2.5 billion. The IRS has distributed a total of more than 8 million plus-up payments so far this year.

In addition to the distribution of plus-up payments, the IRS is also focusing on payments to those people about whom the agency did not have sufficient information prior to the processing of their 2020 tax returns. According to the IRS, the remainder of the third round stimulus payments set to be distributed weekly will be sent to those people who previously lacked information on file with the IRS as well as to those people still waiting for a supplemental plus-up payment.

Eli Fuhrman is a contributing writer for The National Interest.

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