Stimulus Check: Why Your 'Plus-Up' Payment Might Not Be As Big As You Expect

Some people are in line to get extra money if they didn't receive what they were entitled to from the three stimulus checks so far authorized by Congress. But the IRS is cautioning that some people may not get what they expect. 

These so called "plus-up" payments are now being sent by the IRS to people who didn't get their entire payments from the three checks, which each have their own eligibility thresholds and payment amounts. The tax agency said it is now sending out extra payments as it processes 2020 tax returns, which may indicate some people are owed more money.

For instance, each stimulus payment provides money for dependent children, but people who had children in 2020 might not have received all three payments for their kids. That's because the IRS has relied on a family's most recent tax return to determine their payment — and the first two payments were issued before the 2020 tax season began. That means the IRS would have relied on 2019 returns for the first two checks, and, because it would not have known about a child born in 2020, it wouldn't have sent those payments.

The 2020 tax filing season, though, is giving people a second chance to claim extra stimulus money that they are owed but haven't yet received. The IRS says there are two ways that people can fix the total stimulus payments they are owed. 

1. First, they can claim a correction on their 2020 tax return through the "Recovery Rebate Credit," which is on Line 30 of Form 1040, for the first two stimulus payments. That extra money will be sent with your tax refund. 
2. Second, 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 your payment after you file your taxes with what's called a "plus-up" check. This could happen for higher-income people whose income dropped in 2020, allowing them to qualify for one or all of the payments, for example. 

To be sure, this is complicated, and may require some work from people who are owed more. For one, the IRS says people who don't normally file tax returns —such as in the case of some low-income households — must submit a tax return to get their extra money for the first two checks through the Recovery Rebate Credit. 

"You must file a 2020 tax return to claim a Recovery Rebate Credit even if you are otherwise not required to file a tax return," the IRS said earlier this year. 

Less than expected? It can depend on dependents

The IRS is now cautioning that some people may get smaller adjustments from the Recovery Rebate Credit than they might have expected. If you filled out Line 30 on Form 1040, the IRS will double-check your claim — and if there are problems, you might not get what you expect, the agency said. 

If that happens, the IRS said it will send a letter or notice explaining any change — but it also warned that such a glitch could lead to a "slight delay in processing the return."

Two of the potential pitfalls are tied to dependents, according to the IRS. All three stimulus checks provided payments for children who were claimed as dependents on their parents' taxes, but they also had different payment amounts and eligibility rules. For instance, the first check provided $500 per eligible dependent, the second one $600 per child and the third handed out $1,400 per child.

But the first two checks included an age cutoff for children, excluding any teen dependent over the age of 17. The third check provided $1,400 for each dependent, regardless of age. 

The problem will occur if people claimed an extra $500 or $600 from the first two checks on their tax return, but their child had already turned 17 on January 1, 2020. If that's the case, the IRS says those children aren't eligible for the first two stimulus checks, and the taxpayer is out of luck for getting that adjustment. 

The second shortfall could happen if a child was claimed as a dependent on another person's 2020 tax return. This could happen in the case of divorced or divorcing parents, for example. The person who claims the child as a dependent on their tax return should receive the stimulus check. But some divorced parents alternate years when they claim their children as dependents, which can complicate the issue. Only the parent who claimed the child on their 2020 taxes should get the adjustment from the Recovery Rebate Credit, according to the tax website 1040.com.

Math mix-ups and Social Security numbers

Other problems can also lead to lower-than-expected payments, such as math errors on your tax filing. This can impact your plus-up or adjusted payment if you miscalculated your adjusted gross income because your AGI determines the threshold of your eligibility for stimulus money. (Higher-earning households were excluded from all three checks.)

The IRS also warns that if you don't provide a Social Security number that's valid for employment, you won't qualify for extra money through the Recovery Rebate Credit. That's because the first two checks required at least one filer in a household have valid Social Security numbers to qualify, which excluded some immigrant families. 

The third check, however, expanded the eligibility to allow children with Social Security numbers to qualify, even if their parents only have an Individual Taxpayer Identification Number, which is common with immigrants.