The October 15 tax extension deadline is fast approaching and it is one of the last opportunities to receive the two economic impact payments of 2020.
Taxpayers who haven’t received the first two stimulus checks, or who have received less than they should, can claim a clawback refund credit on their 2020 returns.
While October 15 is the last date to file a timely return, technically the IRS gives taxpayers up to three years from the return’s due date to file and receive a refund, says Mark Steber, director of tax information at Jackson. Hewitt.
“This means you can file your return and receive your recovery rebate credit until April 15, 2024,” says Steber.
While taxpayers who miss the third stimulus check cannot claim it on their 2020 return because it was sent in 2021, the IRS says it will automatically remit it using the 2020 information once taxpayers will have filed their declaration. If that doesn’t happen or an incorrect amount is sent, then taxpayers can claim it on their 2021 tax return, an IRS spokesperson told CNBC Make It.
That said, the agency encourages taxpayers to file their 2020 returns before the end of 2021.
How to claim the credit
The first stimulus check was worth up to $ 1,200 per eligible person plus $ 500 per eligible child, while the second was worth up to $ 600 per eligible person and dependent. Typically, individuals with adjusted gross income up to $ 75,000, heads of households earning up to $ 112,500, and married couples jointly reporting earning up to $ 150,000 are entitled to full payments. The amount of the checks then gradually exceeded these income levels.
The value of the checks was initially based on 2019 taxpayer tax returns to streamline their mailing. But those who had a child or lost income in 2020 compared to 2019 are probably entitled to more money than they received based on their 2019 tax return.
Eligible individuals can claim the credit on line 30 of Form 1040 or Form 1040-SR. The tax software should allow users to claim the stimulus check funds, but you will need to know how much you have already received from the IRS. This can be found through bank statements for the deposit amount, or through your IRS online account.
Those eligible for more will not receive a separate check; this will either be part of their tax refund or reduce the amount of tax owed to the IRS.
Additionally, low-income people who don’t normally deposit were also eligible for stimulus checks, but had to give their bank account information or address to the IRS in order to receive them. To do this now, you can file a simplified return or use the IRS Child Tax Credit Non-Filer Registration Tool (the name is confusing, but you don’t need to ‘have a child to use this tool).
In addition to the stimulus payments, the 2020 returns are used to calculate the value of monthly child tax credit payments for eligible parents or guardians.
Finally, some taxpayers have obtained extensions beyond October 15, including those in disaster areas declared by the federal government and members of the military serving in combat zones.
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