Update on the Stimulus Check: if You Fall Into One of These Five Categories, the Internal Revenue Service May Ask You to Repay the Money


Given the rapidity with which the IRS processed stimulus funds into bank accounts over the last two years, it’s unsurprising that some errors occurred. It could have been as straightforward as sending a stimulus payment to someone who made too much money to qualify. Whatever the issue, don’t be shocked if you fall into one of the following five categories and receive correspondence from the IRS.

1. You earned an excessive amount of money.

Each of the three stimulus checks required a certain level of income. Once an individual (or family) reached that threshold, their stimulus payment was gradually reduced. It’s plausible to assume that some of the millions of stimulus cheques distributed in 2020 and 2021 were distributed to people whose income exceeded qualifying. And here’s the problem about tax errors: A tax-collecting agency’s ability to detect a mistake can take years. When it occurs, though, it is reasonable to anticipate communication from the IRS.

It’s critical to remember that the IRS will never call, text, or send an email unless you send the agency a message. If they need to contact you about an overpayment, they will do so via traditional mail to your last known address.

2. You received a check in memory of a deceased relative.

For the majority of us, the last few years have been a blur, with hundreds of thousands of people losing someone they love. The date of that person’s death establishes whether you (or anybody else) have the right to retain their stimulus control. If a loved one died in 2019, the IRS was almost certainly unaware of the death when it sent the first wave of stimulus payments in 2020. As a result, the IRS states that the portion sent in the deceased’s name should be refunded.

Assume you’re married and your spouse passed away in 2019. Because you had not yet submitted your 2020 taxes, the IRS was unaware of the death. In April 2020, checks totaling $1,200 were mailed to eligible adults. If you got $2,400 ($1,200 for yourself and $1,200 for your husband), you may discover that the $1,200 sent to your spouse must be returned.

There has been so much misunderstanding surrounding the subject to date that multiple alternative schools of thought have entered the public discourse. The IRS, on the other hand, states that payments made in 2020 but intended for individuals who died in 2019 should be repaid.

While there is no assurance that the IRS will pursue anyone whose loved one died before 2020, it is critical to realize that it is possible.

3. You are not a citizen

If you’ve been a resident of the United States for years and paid income taxes, but are not yet a citizen, you may have received a check. If this is the case, the IRS may uncover the error and request a refund.

4. You were compensated with an additional check.

Due to the volume of checks delivered, some persons likely got more than one payment for the same round. If you qualified for stimulus funding but received more than one check during the first, second, or third round, do not be startled if the IRS requests that you repay the excess cash.

5. You are categorized as a nonresident alien.

You may have received stimulus cash if you are a nonresident immigrant who works in the United States and pays US taxes. If this is the case, you are ineligible and may be requested to repay the funds.

How to handle the dreaded “letter”

As previously stated, if the IRS discovers an error on a prior tax return, they will write a letter detailing the error. If they are incorrect, you have the right to contest the matter. The IRS’s letter will detail the process’s following phases. If you concur with the IRS’s concerns, the following steps should be taken:

  • If the check has already been cashed: Make a check or money order payable to the United States Treasury for the balance due. Include your SS# (or taxpayer identification number). Include a message explaining why you’re returning the monies to the IRS.
  • If you still have the original check, write “VOID” on the reverse (where you would normally endorse the check). Include a message stating the reason for the return. If your spouse passed away in 2019, the IRS will reissue a check in your sole name.

Do not panic if you do receive notification from the IRS. Contrary to popular belief, the IRS is often easy to work with. The critical point is to respond promptly. The easiest approach to get a letter to the IRS is to mail it to the IRS regional office in your area.

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