Update on Stimulus Checks: The IRS May Request Repayment if You Fit Into One of These Five Categories

Given the rapidity with which the IRS processed stimulus funds into bank accounts during the last two years, it’s unsurprising that some errors occurred.

It might have been as straightforward as sending a stimulus payment to someone who made too much money to qualify. Whatever the situation, don’t be shocked if you fall into one of the following five categories and receive correspondence from the IRS.

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 level, their stimulus payment was gradually reduced.

It’s plausible to assume that some of the millions of stimulus cheques delivered in 2020 and 2021 were distributed to persons whose income exceeded qualifying.

And here’s the problem with tax errors: A tax-collecting agency’s ability to detect a mistake might take years. It is reasonable to anticipate communication from the IRS when it occurs, though.

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

You got a cheque in memory of a deceased relative.

For most of us, the previous 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 unaware of the event when it sent the first wave of stimulus payments in 2020. As a result, the IRS states that the part 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 might discover that the $1,200 given to your spouse must be returned.

There has been so much misunderstanding around the subject that multiple alternative schools of thought have entered the public discourse.

On the other hand, the IRS states that payments made in 2020 but intended for those who died in 2019 should be repaid.

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

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.

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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 got 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.

You are categorized as a nonresident.

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.”

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 case. The IRS’s letter will detail the process’s following phases. If you concur with the IRS’s concerns, the following measures should be taken:

If the cheque has already been cashed:

  1. Make a cheque or money order payable to the United States Treasury for the balance due.
  2. Include your SS# (or taxpayer identification number).
  3. Include a message explaining why you’re returning the monies to the IRS.

If you have the original check: On the back of the check, write “VOID” (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 would reissue a check in your sole name.

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