If you had a child last year, or if you're one of the millions of Americans who saw your income fall in 2020 as a result of the Covid-19 pandemic, be on the lookout for extra cash from the IRS in the form of a "plus-up" payment, according to the tax agency.
As the IRS processes 2020 tax returns, it's sending out extra checks to people who didn't get some or any of the stimulus money they were owed from one or more of the three rounds of federal stimulus payments.
Each round of stimulus checks had its own eligibility thresholds and payment amounts. To determine eligibility, the tax agency relied on a person's most recent tax returns, as far back as 2018. But prior year tax returns may not have reflected how the pandemic affected your finances in 2020.
"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," the IRS statement said.
The latest batch of stimulus payments sent Wednesday included more than 1 million "plus-up" payments, with a total value of more than $2 billion "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.
Those "plus-up" payments will continue on a weekly basis as the IRS keeps processing 2020 and 2019 tax returns.
"The taxpayer should receive the additional amount automatically" between now and the summer, says Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.
Here are some tax situations that may make you eligible to receive a "plus-up" payment from the IRS.
All three rounds of stimulus payments provided money for dependent children, but people who gave birth to or adopted children in 2020 might not have received all three payments for their kids since the IRS issued the first two payments before the 2020 tax season began.
Under the third round of economic stimulus, known as the American Rescue Plan, eligible families are entitled to $1,400 per dependent, meaning a couple with two children could receive a total of up to $5,600. And, unlike with prior stimulus rounds, families with adult dependents over the age of 17 are also entitled to receive the additional money.
Video by Stephen Parkhurst
Maybe your 2019 return shows a family of four, qualifying you to receive $5,600 under the American Rescue Plan, but you gave birth in 2020. With that new dependent detailed on your just-filed 2020 return, the IRS could send you a "plus-up" payment for your third child worth $1,400, as long as the adjusted gross income you reported in 2020 made you eligible to receive the aid.
It's likely you were entitled to some stimulus money under the American Rescue Plan. The White House estimates the plan's payments will reach 85% of households.
If your 2020 income made you eligible to receive some or more stimulus money, you could be receiving a "plus-up" payment.
Let's say you filed as a single taxpayer in 2019 and your adjusted gross income was $85,000. That would mean you exceeded the income thresholds to receive any stimulus money, even if your 2020 income was much lower due to the pandemic. But if you already filed for 2020 and documented that your AGI fell to $65,000, the IRS could send you a "plus-up" payment for the full $1,400 you were entitled to under the American Rescue Plan.
Grow's calculator can help you determine how much you should have received under the government's third stimulus package.
As of Wednesday, the IRS has sent an estimated 156 million third-round stimulus payments valued at $372 billion since the passing of the American Rescue Plan last month.
Even though the IRS is sending out "plus-up" stimulus money on a weekly basis, the tax agency is still encouraging taxpayers to file their 2020 tax returns as soon as possible.
Filing your 2020 taxes will give you a chance to claim stimulus money that you are owed but haven't yet received, Holtzblatt told Grow in February. "When you file your 2020 taxes, the IRS will know how you might have been affected by the pandemic," she said.
On your 2020 tax return, you'll have the option to claim stimulus aid in the form of a tax credit called the Recovery Rebate Credit.
The IRS is also giving taxpayers an extra month to file: It delayed the tax deadline to May 17.
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