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Some Americans who didn't receive as much money as they were entitled to in the three stimulus checks approved by Congress are now poised to receive extra cash as part of a "plus-up" payment.
But the IRS cautioned people this week that some payments may be worth less than expected, depending on several factors. The "plus-up" payments are for people who didn't get their entire payments from the three rounds of federal stimulus checks – worth $1,200, $600, and $1,400.
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The checks, which each had their own eligibility criteria and income threshold, were typically calculated based on an individual's 2018 or 2019 tax returns. But those returns didn't always accurately capture a person's financial situation; for instance, millions of Americans who lost their jobs, or saw their income reduced, last year as a result of the pandemic were actually qualified for a bigger check. That also includes individuals who had a child in 2020.
Americans who are owed more money have two ways to claim the funds: You can use a recovery rebate worksheet to calculate how much you should receive from the original two checks and claim that amount on Line 30 of Form 1040 and Form 1040-SR when filing your tax returns. That money will arrive as part of your refund check.
If the IRS already sent the third stimulus check but you are owed more based on your 2020 tax returns, the IRS will automatically adjust the payment after you file your returns with a "plus-up" check.
The agency has sent an estimated 156 million checks as part of the third round of payments. The latest round, worth about $36 million, was sent mostly to low-income Americans who are not required to file tax returns, including 19 million checks for Social Security recipients. It also included 1 million "plus-up" payments.
But the IRS is warning that some people may receive smaller-than-expected adjustments. The agency said it would send a letter explaining any discrepancies, but noted it could cause a "slight delay in processing the return."
One issue may arise from dependents and the differing rules on who's qualified for the money.
The first round of stimulus checks, for instance, provided $500 for dependents under the age of 17. The second check offered $600 for children under the age of 17, and the third check – the largest – gave $1,400 for all dependents, regardless of age.
But some Americans may mistakenly claim an extra $500 or $600 from the first two checks on their tax return, even though their child turned 17 on Jan. 1, 2020, and is not actually eligible for the money.
Another mix-up may stem from divorced parents if both parents try to claim the same dependent on their taxes. Only the parent who claims the child as a dependent should get the stimulus check adjustment, according to the tax website 1040.com.
For more, go to Fox Business.