You could be owed more stimulus money this tax season – what to know

Tax season begins next week – and some individuals may find when they file their returns that they are actually eligible for additional stimulus money.

The IRS based payments on either 2018 or 2019 tax returns – whichever was the most recent it had on file at the time.

However, if you had not yet filed your 2019 return (or it was not yet processed) and experienced a loss in income in 2020 during the pandemic, you may find yourself eligible for additional stimulus dollars.

The payments are considered an advance on a refundable tax credit for the 2020 filing year – which means the funds were distributed early based on data available to the tax agency at the time. However, if the applicable 2020 income data changes your eligibility, you can claim the credit when you file.

On the flip side, if you received money that you are no longer eligible for based on a past tax return (i.e. $500 for a dependent who is no longer a dependent on your 2020 filing) you are not required to take action to return it.

STIMULUS BENEFITS AND YOUR 2020 TAXES: WHAT TO KNOW

Here’s a reminder on the eligibility requirements:

CARES Act

The first Economic Impact Payment was $1,200 ($2,400 if married filing jointly for 2020) plus $500 for each qualifying child you had in 2020.

The phase-out thresholds started at $75,000 (individuals) and $150,000 (married filing jointly) at a rate of $5 per each $100 income exceeds these levels.

Payments phase out completely for income above $99,000 for individuals and $198,000 for couples.

$600 payments

The second Economic Impact Payment was $600 ($1,200 if married filing jointly for 2020) plus $600 for each qualifying child you had in 2020.

The phase-out thresholds kick in at $75,000 (individuals) and $150,000 (married filing jointly) at a rate of $5 for every $100 in AGI over the limits.

Payments phase out completely for income above $87,000 (individuals) and $174,000 (filing jointly).

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How to claim:

If you find yourself in a situation where you are owed money based on how your economic impact payment was calculated, you can claim it when you file your 2020 tax return.

Individuals must file Form 1040 or Form 1040-SR to claim the Recovery Rebate Credit, even if they are do not normally file a tax return.