The American Rescue Plan Act of 2021 added section 6428B to the Internal Revenue Code. It authorized payments up to $1,400 to qualifying individuals — $2,800 for people filing jointly — plus another $1,400 for each qualifying child as part of President Joe Biden’s $1.9 trillion coronavirus stimulus package.
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It was the third major pandemic recovery bill of its kind.
Those payments came during turbulent times as the vaccine battles were heating up and inflation was starting to rise. A lot of information about the payments got lost in the shuffle, and the impact is still being felt today.
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Hundreds of Millions Received Hundreds of Billions
According to the IRS, the third round of stimulus delivered 163,522,770 payments for a total of nearly $390 billion. The vast majority — nearly 138 million payments — were made electronically. Another 21 million or so were delivered as paper checks and a little less than 4.56 million were paid with debit cards.
The third round expanded access to payments for many populations, including 13.5 million more dependents who qualified toward their families’ payments compared to the previous round of checks. But round three also tightened the income limits. According to CNET, about 16 million people who qualified for the second round of payments likely did not qualify for the third.
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Millions of Payments Went Overseas
Combined over all three rounds of stimulus, about 3.7 million payments worth $5.5 billion were sent to more than one-third of the 9 million or so U.S. citizens who live overseas, according to CNBC. The term “overseas,” however, can be misleading because it includes residents of U.S. territories like Puerto Rico. Many checks also went to military members stationed overseas and American citizens living abroad.
If the IRS Made a Mistake, Their Loss Is Probably Your Gain
In a rare case of Goliath making concessions to David, stimulus check recipients get to keep the money in most cases where the IRS mistakenly overpaid, according to Entrepreneur. For example, if the IRS calculated your stimulus payments based on your 2019 income tax returns, but you earned enough in 2020 that your payments should have been reduced, the IRS won’t try to get the money back.
It’s important to note, however, that the IRS will play hardball to reclaim extra payments under certain circumstances, like if you received a check that was meant for a person who died or kept a check that was sent to a dependent claimed by someone else on their taxes.
‘Plus-Up’ Payments Made Partial Payments Whole
The IRS might have overpaid some taxpayers whose 2020 returns showed more income than their 2019 returns, but in other cases, the mistake went the other way — against the taxpayer. In cases like these, the IRS used the recipient’s 2019 returns to calculate their stimulus payment when their 2020 returns might have qualified them for more money.
In those cases, the IRS issued what the agency called “plus-up” payments to make up the difference to those who had already received checks but were eligible for a larger amount. The IRS made it easy by calculating and sending the plus-ups automatically without requiring recipients to request one or file an amended tax return.
Recovery Rebate Credits Let Recipients Claim Missing Money
“Plus-up payments” wasn’t the only odd IRS lingo to enter the national lexicon in 2021 — stimulus recipients also began hearing about Recovery Rebate Credits. The IRS issued those to people who didn’t receive one or both of their first two payments, or who received less than they were eligible for.
Some Parents Lost a Loophole in 2021
During the first two rounds of payments, some parents who weren’t married or filing jointly were able to each collect a stimulus payment for the same child, provided they alternated the tax years that they claimed the child as a dependent. Congress closed that loophole with the American Rescue Plan and the third round of payments.
Those Who Needed It Most Were Often Left Out
In 2020, ProPublica reported that as many as 12 million Americans who were eligible for payments didn’t receive them. Many of them were the people who needed it the most — the homeless. In March of 2021, as the third round of payments was being distributed to millions of American households, Vox reported that those without households were set to miss out again.
All Americans who earned less than $75,000 were eligible to receive $1,400, and for homeless people trying to save for a security deposit on an apartment or who needed urgent medical care, $1,400 would have truly been a life-changing sum of money. But by definition, the homeless don’t have fixed addresses to mail checks to and many don’t have bank accounts to deposit them into. Many don’t even have the documents needed to prove their identities and many others haven’t filed tax returns, which the IRS based its payments on.
The Checks — But Not the Payments — Have an Expiration Date
Like all checks, those mailed by the government must be cashed by a certain date before they’re rendered void. All checks issued by the U.S. Treasury have a one-year expiry date, according to Entrepreneur, including stimulus payments — but only on the paper checks. The good news is, it’s just a formality. If the expiration date passes — or if your check is lost, damaged or stolen — the money is still good and the IRS will issue a new one upon request.
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