“It’s even harder to make ends meet during the pandemic,” said Rodriquez, 60, who was expecting a $1,000 stimulus payment, $500 for each child. “Food and household supplies are more expensive now, and we cannot afford everything we need. I tried to follow the proper instructions to receive this necessary help.”
The Cares Act provides economic impact payments up to $1,200 for individuals and up to $2,400 for taxpayers filing a joint tax return. The law also includes an extra $500 for each child under 17.
But the distribution has been plagued by glitches — including missing or incorrect payments for dependent children. And these $500 payments were supposed to go to some of the most economically fragile Americans.
A recent report from the U.S. Government Accountability Office found that the IRS made $1.4 billion in stimulus payments to dead people. The report also revealed that from April 10 to May 17, some stimulus payment calculations did not include additional money for qualifying children, even though the recipients had correctly submitted information about their dependents to the IRS. The incomplete payments went to people who aren’t required to file a federal tax return because of their low income.
IRS officials initially told the GAO that up to 450,000 low-income people did not receive the money they were due for dependent children. During testimony to the Senate Finance Committee on Tuesday, IRS Commissioner Charles Rettig revised the figure down to 365,000.
The IRS told the GAO it was “working to identify and adjust the accounts” and would make the missing payments for dependent children by the end of July.
That is good news for the hundreds of thousands of individuals who gave the IRS dependent information that the agency didn’t capture. But there are still potentially millions of other low-income Americans — non-filers — who may not get the extra $500 for children until next year.
Those at risk of being left behind include Willard McGruder, 63, who is raising two young grandsons on the $1,400 Social Security Disability Insurance payment he receives each month.
The boys’ mother is incarcerated, but she told her father from jail that he would be getting the $500 for each boy to help with their care. He wouldn’t have known otherwise. “I’ve had these kids almost 17 months, day and night, caring for them all by myself, McGruder said in an interview.
Because many low-income people receiving certain federal benefits are not required to file tax returns, the IRS has no way of knowing they have qualifying dependent children. This dilemma led to the agency creating a special online non-filers tool to help process stimulus payments.
Individuals receiving certain federal benefits — Social Security retirement benefits, survivor or disability benefits, or Railroad Retirement benefits — automatically received stimulus payments even if they didn’t file tax returns. But they were required to go online and use the non-filers tool to claim the extra $500 they were owed for each dependent child.
In a much-criticized move, the IRS issued a special alert on April 20 on its website giving the group around 48 hours to claim their $500 payments. If they missed that very short window, they would have to wait until 2021 to get the money. Keep in mind that there was no direct communication with any of the federal benefit recipients about the tight deadline.
The IRS set another deadline of May 5 for people who receive Supplemental Security Income or Veterans Affairs benefits to claim their dependent children.
“A lot of people just had no idea that there was some sort of form that they had to fill out,” Jennifer Burdick, an attorney with the Community Legal Services of Philadelphia, said in an interview. “A lot of my clients also are not going to be able to fill out an online computer tax form. This form is very hard to use on a cellphone.”
The IRS said it rushed the process to ensure the additional $500 for dependents was included with $1,200 adult payments. The agency initially decided that once a stimulus payment has been issued, it would not send out a separate, supplemental payment for eligible children.
But the tax agency then reversed that decision because of its error, moving to send secondary payments to those who used the non-filers tool by May 17. When pressed by senators Tuesday, Rettig said: “We’re sympathetic with these issues. . . . It’s not an easy thing for us to accomplish.”
But he would not commit to sending out the supplemental payment to low-income beneficiaries who have already received their $1,200.
Burdick said that wasn’t enough. “I’m glad that the IRS has agreed to issue supplemental payments to some parents and caretakers, but their decision doesn’t go far enough to help parents and caretakers who couldn’t use the portal because of their disabilities, lack of computer access, or lack of notice,” Burdick said. “The IRS appears to agree that the intent of the payments is to help as many families, as soon as possible. If that’s the case, they should be willing to make supplemental payments right away to all parents and caretakers who haven’t received payments for their children.”
It’s particularly important to get those payments out now, because by 2021, some of the children will age out of eligibility to receive stimulus funds, pointed out former taxpayer advocate Nina Olson.
“They’ve got the discretion,” Olson said in an interview. “The statute doesn’t say, ‘make only one payment in 2020.’ Some of these people are going to experience irreparable harm because they will lose eligibility for that payment and not because they did anything wrong.”
By the time McGruder’s daughter told him about the dependent payments, it was too late. He missed the deadline by two days.
“I was going to use the money to buy food and clothes,” McGruder said in an interview. “I just wish they could get the money to me now.”