Third dunning check: here’s what could delay or reduce your payment

The third stimulus check is already hitting some bank accounts, just a day after President Joe Biden signed the American Rescue Act. But while some households will see the funds in the next few days, others may wait longer.

About 85% of people will receive one of the $ 1,400 checks, Biden said on Friday. But it’s likely that some of the issues that hindered delivery for some people in the previous two rounds could cause a repeat situation. For example, some people who did not have a bank account on file with the IRS during the previous two rounds of checks had to wait several weeks for debit cards or paper checks to arrive at their homes.

It is very likely that people who have filed their 2020 or 2019 tax returns and have a bank account with the tax agency will quickly receive their stimulus checks by direct deposit, depending on previous payment deployments. That’s because the IRS prioritizes the rapid distribution of the stimulus money to those it knows it can reach – and that’s a huge effort, given that the tax agency has $ 422 billion in funds to distribute to over 100 million taxpayers.

“You don’t have to do anything to get your stimulus check,” a TurboTax spokesperson told CBS MoneyWatch in an email. “The IRS will determine eligibility based on your last tax return (2019 or 2020) and will likely send your payment to the bank account where your tax refund was deposited.”

The TurboTax spokesperson added, “If you haven’t yet filed your 2020 return, you can do so now to give your most recent information to the IRS, including bank account or address information. to make sure your stimulus check goes to the right place. “

A financial institution told CBS MoneyWatch that it started receiving payments from the IRS for its customers as of 11 a.m.ET on Friday. The bank, Current, said customers were receiving their stimulus payments faster because some updated their bank account information with the IRS when they filed their 2020 tax return – and added that some accounts had received stimulus payments of up to $ 9,800.

Even though some payments arrive just a day after the bill is signed, the IRS has until the end of 2021 to distribute the checks, according to the law.

Here is what could prevent some people from receiving their money or receiving the wrong amount.

You have not filed your 2019 or 2020 income tax returns

A lot of people probably haven’t yet filed their 2020 income tax returns, given that the deadline to get your tax forms is April 15. In this case, there is no reason to worry – the IRS will use your 2019 tax return to determine how much you should receive.

But it becomes more delicate for people who are not required to file income tax returns, such as those who have little or no income, which may be the case for some people on social security.

This became a problem with the first round of stimulus checks, especially since many of these people needed the first round payments of $ 1,200 the most – and it was not an insignificant number. The IRS said it distributed more than 22 million stimulus payments last year that were not based on filed tax returns.

Due to this problem, the IRS last year created a website specifically for non-filers, where they could provide their bank account information or addresses to the agency, as well as their number of dependents. , who were each eligible for $ 500 in stimulus assistance. at the time.

But the non-filers website has been shut down since late last year, and IRS and Treasury officials said in a conference call Friday with reporters that they were urging non-filers to file a 2020 tax return to make sure they get all payments and tax credits. they are due.

You have filed a paper return

The IRS warned earlier this year that people who file paper tax returns could experience delays. This is because the IRS is still dealing with a traffic jam of tax returns filed in 2019 – and it’s likely that 2020 returns filed on paper will also experience processing delays.

The tax agency’s backlog is in part due to the pandemic, which prompted the IRS to shift its workers to remote work. When that happened, he stored the paper tax returns in trailers until he could pull it off. At the end of January, there were still 6.7 million reports awaiting processing.

People are expected to file electronically in 2020 to ensure faster processing of their taxes, as well as refunds and stimulus payments, IRS and Treasury officials said on Friday.

You have moved or changed your bank account

This could be of concern for people who have received a check in the mail or a prepaid debit card but have recently moved, as well as for people who have changed bank accounts.

The IRS has announced that it will open its “Get My Payment” tool on IRS.gov next week. The site will notify people of the status of their payment, but will not allow them to update their bank account information, Treasury and IRS officials said on Friday. However, officials added that the agencies were working to verify whether the bank account information they had was correct for consumers.

The downside: If a check is issued to a closed or incorrect account, the IRS will have to reissue the payment by check and mail it to your home. It might add to your expectation.

You have new or older dependents

Some people can get their checks quickly, but find the amounts incorrect, which could most likely be due to their dependents.

The third stimulus check allows dependents to receive $ 1,400 each, but the IRS may not be aware of your children in some cases. For example, if you had a baby in 2020 but have not yet filed your tax return, the IRS will use your 2019 tax return to determine how much is owed to you, which will not show not the new child because he hadn’t. still born.

For example, a couple with a baby born in 2020 should receive $ 4,200, but if the IRS doesn’t have their 2020 tax return, it will issue a payment of $ 2,800 for both adults in the family. But IRS and Treasury officials said on Friday that families in this situation can rest assured that they will eventually receive the extra $ 1,400 for their baby.

When they file their 2020 tax return, the IRS will check to see if they owe them more, as in the case of a baby born last year. If that happens, the IRS will automatically issue the additional check for $ 1,400 to the family, officials said.

Similar problems could arise for people who do not normally file income tax returns and who used the non-filers tool to report their dependents last year. Because the first two rounds of edits excluded dependents over the age of 17, the IRS did not count older teens and dependent adults on the non-filers tool.

People who typically don’t file tax returns are encouraged to file a 2020 return this year, Treasury and IRS officials said. This would help the IRS determine if any dependents qualify for the third stimulus check. It would also unlock other tax benefits that these households would not otherwise have claimed, such as the child tax credit or the earned income tax credit, both of which were expanded in the US bailout.

You lost income in 2020 but have not yet filed a return

Some people could also receive less than what they are entitled to if their income drops in 2020, but they have not yet filed their 2020 income tax return. This could happen for a single person earning $ 90,000 in 2019, which is above the $ 80,000 threshold to receive payment, but lost their job in 2020 and only earned $ 45,000 last year as a result.

If that person has not yet filed their 2020 return, they will not receive a stimulus payment because the IRS will base their calculation on their 2019 return, showing that they are not eligible. But as soon as they file their 2020 tax return with the lowest incomes, the IRS will issue them a stimulus payment, IRS and Treasury officials said.