In May of 2020, President Donald Trump signed into act a $2 trillion dollar stimulus package that would serve every eligible American with a stimulus check of up to $1200 per adult, and $500 per child under the age of 17 years.
As of July 2020, the Internal Revenue Service (IRS) has sent out 140 million payment checks as a form of economic relief.
If you have already received your stimulus check and spent the funds, you may have more coming your way in 2021. This is because the economic impact payments were basically an advance for a tax credit that was established for the 2020 tax year. If you got a lower payment than the full amount, you could get compensated for the rest of the $1200 if your financial situation changes this year (i.e. if you earn less income than you did in the 2018/2019 filing years).
This article will serve to outline seven different situations where you may be eligible to receive your owed stimulus payment in 2021.
1. You claim the difference in stimulus payments between 2019 and 2020 when you file in 2021.
In order to be eligible for the stimulus check, you must have a gross income of $75,000 a year or less.
Like the information explained above, if you are filing your taxes in 2021 and you earned less than $75,000 in 2020 because of economic hardship, like job loss or decreased hours, you could gain eligibility for the full economic impact payment amount that you may not have received when the IRS was sending out stimulus checks in 2020.
This is how the new tax credit is supposed to help those who have been impacted economically.
2. Your retirement contributions increased in 2020.
An interesting way to have dealt with your income in this economic climate might have been to increase your retirement contributions.
In turn, this would adjust your yearly calculated income according to the amount of increased contributions you made. For example, say your yearly income in 2020 was $80,000, causing you to not be eligible for the full $1200 stimulus paycheck. However, let’s say you decide to contribute an extra $5,000 to your retirement fund for the year.
This would result in your 2020 annual income to drop down to $75,000. So when filing your tax return in 2021, this would help you to become eligible for the tax credit that would give you the rest of the stimulus money you would have been eligible for if you had only earned $75,000. This is only possible if the extra monies are contributed towards your 401(k) or a traditional Individual Retirement Account (IRA).
According to the stipulations of the stimulus paychecks, if you are an individual, you are eligible to get a paycheck if you earn over $75,000. However, 5c is deducted for every $1 you earn over the $75,000 threshold.
This would be a savvy move on your behalf to ensure that you are set up for later.
3. You have a child dependent but receive Social Security or any other benefits.
If you are on any sort of benefit program whether it be Social Security, Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI) or Veteran Affairs (VA) benefits, you are not required to file any sort of tax returns.
Therefore, if you were enlisted in any of the above programs, the Internal Revenue Service will have acquired your information and just paid you out a stimulus check on their own.
It’s important to note that the Internal Revenue Service (IRS) would have only acquired your information and not any information pertaining to others in your care.
This means that if you have any child dependents in your care, chances are their information was not captured, and the stimulus funds that you may have been eligible for because of the individuals you care for were likely not sent to you.
Unless you were able to indicate to the Internal Revenue Service that you had child dependents (individuals under 17) in your care using online tools under a non-filer status, you probably would not have received the $500 allocated to child dependents.
You will be able to receive this $500 paycheck for each child dependent you have in 2021.
If you received your $1200 stimulus payment but did not receive a $500 check for child dependents in your care, you will need to file a 2020 tax return in 2021 in order to receive it.
4. You have a child or adopt a child in 2020.
If you had the blessing of welcoming a child into the world or adopting a child during 2020, chances are that the tax returns you will file in 2021 will look vastly different from those filed in 2020.
In this situation, you will now have an extra dependent which you can add to your tax return. A child is considered a dependent if they are under the age of 17, and this includes newborns.
With this added dependent on your tax return, you will be eligible to receive an added $500 per child dependent in 2021.
5. You claimed that you were a child or adult dependent in 2019 but not in 2020.
Let us start with the child dependent situation. If you were 17 years of age, and your parents filed their tax returns in 2020 with you as a child dependent, they would have received a $500 stimulus payment for you.
However, come the 2020 tax year in 2021, if you are no longer a child dependent, you could file a tax return as an adult to claim your $1200 stimulus payment in 2021.
You can do this even if you are a student, or do not earn enough to be required to file a tax return.
In doing so, you will be eligible to receive the payment into your account.
Now let us turn our attention to another situation. If you are being taken care of by your children or other family and were thus included in their 2020 tax returns, chances are they did not receive any stimulus payments for you as you are older than 17 years of age.
Now you have the opportunity to file tax returns of your own in 2021 for the 2020 tax year in order to receive your own stimulus payment worth $1200. Just note that this may be an issue if your caretakers claim you as a dependent in 2021 while you are independently filing your own returns. So make sure that no one is claiming you in this situation if you are filing your own return.
This is common with college students or adult-age children still under the care of their parents.
6. You shared parental custody claims.
Shared custody of a child between two parents can cause there to be a grey area in this stimulus situation.
If you are the separated, divorced or unmarried parents of a child, then shared custody of that child makes it possible that both parents may file a claim for the $500 stimulus payment for the same child.
In order for this situation to work, it will require amicability and communication between the two parents.
Each parent would technically have to claim the child as a dependent for the stimulus payment in two different tax years. For example, if the mother of a child has filed her tax returns for the 2019 year, she would have received a $500 paycheck in 2020.
Now looking into the future for the tax return season of 2020, the father could now file his tax returns with his child included as a dependent, thus allowing him to receive an extra $500 stimulus paycheck for his child.
This “tag” situation of claiming a stimulus payment allows individuals to receive what they need for their child whilst not being in a relationship.
In a situation where a couple would be married or living together and file their tax returns together, they would only receive $500 per child in a household.
However, in this situation, they would then be able to file for a $500 payment per household, thus increasing the quality of life for the child in each household they participate in.
7. You forgot to claim in the 2020 tax year but wish to claim in 2021.
Let’s say you are an adult but failed to claim your stimulus check in 2020. Now of course you can do so in the future. Moving into the 2020 tax return year, you should file or apply to claim your stimulus paycheck in 2021. This may be unusual to students or low-income workers, but it’s important to note that you do not necessarily have to file a tax return to apply for this stimulus payment.
There is the option of using the non-filer tax tool on the IRS website to apply without filing. In order to do so, you will need a Social Security Number.
Any individual that cannot provide a Social Security Number will not be eligible for any stimulus payment. These paychecks can be paid out digitally or physically on paper in the form of a check.
If, however, you are incarcerated, you will not be able to receive any form of stimulus payout, nor will you receive any compensation if you have any legally owed funds that are in your financial record, such as outstanding child support. In this case, your stimulus payment will go directly toward the debt.