IRS revises tax guidance on third round of Economic Impact Payments

The Internal Revenue Service updated its frequently asked questions page Friday on how tax professionals should deal with the third round of Economic Impact Payments for their clients.

The revised fact sheet includes a number of areas where the IRS amended the FAQs, including general information, eligibility and calculation of the third payment; plus-up payments and EIP cards. Other revisions are in the areas of requesting and receiving the payments, reconciling them on the tax return, as well as specific information for Social Security, Railroad Retirement and Veterans Affairs benefit recipients. The FAQs also explain what happens when a payment has been lost, stolen, destroyed or hasn’t been received.

The third round of Economic Impact Payments was provided by the American Rescue Plan Act of 2021, which was passed by Congress in the early months of the Biden administration. The payments also functioned as an advance payment of the 2021 Recovery Rebate Credit. The IRS started sending the third-round Economic Impact Payments to eligible individuals in March 2021 and continued sending the payments throughout the year as tax returns were processed. The IRS later issued so-called “plus-up payments” for those whose initial stimulus payments fell short of what was later calculated.

While the IRS said it has already sent out all of the third round of EIPs and plus-up payments, it noted that some families and individuals may not have received the full amount of their third-round EIP because their circumstances in 2021 were different than they were in 2020. Those families and individuals may be eligible to receive more money by claiming the 2021 Recovery Rebate Credit on their 2021 income tax return. The fact sheet provides details on those who qualify for the payments and how to get them.

The Get My Payment online tool on IRS.gov is no longer available. To find information regarding any missing EIPs, taxpayers should access their individual IRS online accounts and look under “Tax Records.” The IRS has also been sending Letter 6475 through March 2022 to the address it has on file for taxpayers, confirming the total amount of their third-round EIP, including any plus-up payments they received for tax year 2021.

In answer to the question of whether the third-round EIP will affect the benefits a taxpayer receives, the updated fact sheet says no. “Economic Impact Payments can’t be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds,” said the IRS. “These programs also can’t count Economic Impact Payments as a resource for purposes of determining eligibility for a period of 12 months from receipt.”

The IRS also urged everyone to be on the lookout for scammers trying to use the EIPs as a cover for schemes to steal their personal information and money.

While the IRS is no longer sending out EIPs or plus-up payments, taxpayers can still claim the funds on their tax returns. “If your 2019 or 2020 return was not fully processed in time to issue your third payment by the statutory deadline of Dec. 31, 2021, you may be eligible to claim the 2021 Recovery Rebate Credit and must file a 2021 tax return to claim the 2021 Recovery Rebate Credit,” said the IRS. “If you need to file a federal tax return for 2021 and have income of $73,000 or less, you can file your tax return electronically for free with the IRS Free File Program.”