It doesn’t appear the Republicans’ “skinny” stimulus bill is going to be passed anytime soon. So, the IRS is appealing to the estimated 9 million people who still haven’t collected the first economic impact payment, which may be their one and only chance for coronavirus-related relief funds.
People who don’t normally file a tax return or don’t receive certain federal benefits have until Oct. 15 to use the non-filers tool at irs.gov if they want to get up to $1,200 in aid for individuals and $2,400 for married couples by the end of the year. Many might also be entitled to an additional $500 payment for each dependent child who was under 17 at the end of 2019. You don’t need earned income or a job to qualify for a stimulus payment.
The economic impact payment is an advance credit for 2020. Under the Cares Act, the payments must be made by Dec. 31. If people don’t receive the money by year’s end, they still have an opportunity to get the stimulus funds. However, they’ll have to file a 2020 federal return in 2021.
What this means: Millions of the people who most need federal assistance may never get it, because they aren’t in the habit of filing a tax return.
If you filed a return for 2018 or 2019, you don’t have to use the non-filers tool. The same is true if you receive Social Security retirement, survivor or disability benefits, Supplemental Security Income (SSI), Railroad Retirement benefits or Veterans Affairs benefits. Payments to federal beneficiaries is automatic. If you haven’t received the money, it may be on the way. But to complicate things further, people who receive federal benefits and have children under 17 still must use the non-filers tool to claim the extra $500 stimulus payment.
The IRS has stumbled badly with the distribution of payments to parents who receive federal benefits. If they don’t normally file a federal return, because of low earnings, the IRS doesn’t know if they have children who qualify them for the $500 stimulus payment. Even though their stimulus payments were sent automatically, those parents still must use the non-filers tool to claim the additional funds for their eligible dependent children.
The non-filers tool also allows people to provide banking information for direct deposits, hopefully reducing the time it takes to receive a stimulus payment.
The IRS said the new letters are being mailed to people who haven’t filed a federal return for 2018 or 2019. The agency was able to identify the recipients by looking at W-2s, 1099s and other third-party statements.
The mailings should go out around Sept. 24 and will have an IRS address. This last bit of information is important because so many of the glitches that have plagued the distribution of the stimulus payments have involved confusing and conflicting communications with recipients.
Many people received their stimulus payments on a preloaded debit card. The problem was the IRS sent the stimulus debit cards without direct communication to taxpayers that it was coming. So, when the cards arrived in a plain envelope that didn’t indicate it came from the IRS, many people mistook it for junk mail or a scam. And they threw away the cards. That resulted in the Treasury Department having to mail more than 788,000 letters telling people how to collect their money if they tossed the payment out by mistake.
The cards, sent in May and June, were issued by MetaBank and came in a plain envelope from a company called Money Network Cardholder Services.
This time, to help avoid the same mistake made with the stimulus debit cards and avoid fraudulent copycats, the IRS has posted a copy of its letter at irs.gov. Receiving a letter doesn’t automatically mean a person qualifies for a stimulus payment. “An individual is likely eligible if he or she is a U.S. citizen or resident alien; has a work-eligible Social Security number; and cannot be claimed as dependent on someone else’s federal income tax return,” the IRS says.
The IRS says more than 7 million people have used the non-filers tool to claim a stimulus payment.
One caution: Do not use the non-filers tool if you have filed or intend to file a 2019 federal return. You can still get your stimulus payment by filing a return. The IRS is processing stimulus payments based on recently filed electronic returns.