01 Apr Which tax return will the IRS base my third stimulus payment on?
Q. I used the Recovery Rebate Credit on my 2020 tax return because my 2020 income was lower than 2019. Will the 2020 figures be used for the new $1,400 stimulus payment?
— Need the money
But timing is everything.
When the IRS processes your tax return is what will make the difference in determining what year the agency will use to calculate your stimulus payments, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.
He said the worst case scenario is that you will have to wait until it processes your 2020 tax return to see your third stimulus payment.
“It is our understanding that the current checks would be cut based on the most current tax return information the IRS has in their system, therefore if your 2020 tax return had not been processed prior to the first round of checks being issued they would still be using 2019 information,” Gallo said. “Once your 2020 return is processed and if it determines that you are eligible for stimulus relief, the IRS has until the end of 2021 to issue your check.”
The IRS has not yet given guidance on how taxpayers will be able to make adjustments in the future.
The agency is still backed up with some 2019 returns that haven’t yet been processed, so it’s possible that 2020 returns may also take longer to process.
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This story was originally published on April 1, 2021.
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