The IRS Warns You'll Have to Return Stimulus Money If You Did This
You could owe the tax agency a repayment or returned check.
Over the last two years, millions of people in the U.S. were given financial aid from the government in the form of three separate stimulus checks. If you received the full amount for each payment, it came to $3,200 in COVID relief. The last checks started arriving in households back in March 2021, so many of us have already used up all these funds. But it turns out, not everyone was supposed to keep the money they've received from the IRS. According to the tax agency, there are a few stipulations that might require you to return your third stimulus check. Read on to find out if you owe this money to the IRS.
You'll have to return your third stimulus check if you were sent it despite not being eligible.
There were many qualifications you needed to meet to legally receive the third stimulus payment—and your citizenship was part of it. While you weren't necessarily required to be a U.S. citizen to get the check, you did have to be considered a tax-based qualifying resident alien in 2021 and not claimed as a dependent of another taxpayer for eligibility.
According to the IRS, people in the U.S. who were considered to be nonresident aliens—individuals who are not a U.S. citizen or U.S. national—in 2021 are not eligible for this third check. So if you received it incorrectly, you'll need to pay it back. "An alien who received a payment but isn't a qualifying resident alien for 2021 should return the payment to the IRS," the agency said.
You might also need to repay money if you accepted a check not meant for you.
You should know not to cash a check that isn't directed to you. But the IRS could have potentially mailed the third stimulus payments to people who died before Jan. 1, 2021, despite noting that these recipients are not eligible. And you might assume that since they can't use it, you can—but that's not the case. "A payment made to someone who died before they received the payment should be returned to the IRS," the tax agency says.
One instance, however, might make you able to keep some of the money. The IRS says that if the payment was made to joint filers and one spouse is still living, that person may ask to be sent a new check for their eligible portion. "If you can't cash or deposit a joint payment because it was issued to you and a spouse who died in 2021, return the check," the IRS advises, adding that you should "include a letter requesting us to reissue the third payment in your name only as the surviving spouse."
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But you won't have to give money back just because you received too much.
The third stimulus check was issued to most people last year as an advancement of a 2021 tax credit. According to NerdWallet, this means that because the IRS did not have access to your 2021 tax information yet when sending this payment, they likely relied on your 2020 or 2019 tax return to determine if you were eligible. As a result, taxpayers might realize that they don't actually qualify for all the money they received for the third economic impact payment when filing their 2021 return.
But fortunately, the IRS has a no harm, no foul outlook on recipients in this case. According to the tax agency, you don't have to pay back money from your third stimulus check, even if you received too much. "If you qualified for a third payment based on your 2019 or 2020 tax return, the law doesn't require you to pay back all or part of the payment you received based on the information reported on your 2021 tax return," the IRS explains.
You can return the money in a number of ways.
You can go about getting this money back to the IRS in multiple ways. If you received a paper check and have not cashed it yet, the agency says you should void it and mail it back to your appropriate IRS location based on the state in which you live.
On the other hand, if you received a direct deposit payment or you've already cashed the check, you should submit a personal check or money order for the amount you need to pay back to the appreciate IRS location. The check or money order should be made payable to the U.S. Treasury, with your taxpayer identification number and "Third EIP" written for the recipient of the check.
And no matter how you choose to repay your third stimulus check, the IRS will want to know why you are returning the money. The agency asks that you "include a brief explanation stating the reason" as to why you are repaying the money you received.