The COVID-19 pandemic brought unprecedented challenges, and with them, a series of economic lifelines from the U.S. government in the form of stimulus checks, also known as Economic Impact Payments (EIPs). For many, these payments provided crucial financial relief. However, navigating the eligibility requirements and claiming process, especially for those in non-traditional financial situations like receiving COBRA with limited income, can be confusing.
If you’re currently receiving COBRA benefits and your income hovers around $1,200 (or less), you are likely eligible for one or more of these stimulus payments, and this article will guide you through the process of claiming what’s rightfully yours.
Understanding Stimulus Checks: The Basics
Before diving into how to claim your payment, let’s briefly recap the three main rounds of Economic Impact Payments:
- First EIP (CARES Act, Spring 2020): Up to $1,200 per eligible adult and $500 per qualifying child dependent.
- Second EIP (Consolidated Appropriations Act, December 2020): Up to $600 per eligible adult and $600 per qualifying child dependent.
- Third EIP (American Rescue Plan, March 2021): Up to $1,400 per eligible adult and $1,400 per qualifying child dependent.
Eligibility for all payments generally depended on your Adjusted Gross Income (AGI) from a recent tax return (typically 2019 or 2020), having a valid Social Security Number, and not being claimed as a dependent on someone else’s tax return. Payments were phased out for higher incomes.
Why Your Situation (COBRA & $1,200 Income) Makes You Likely Eligible
Being on COBRA often signifies a period of job loss or reduced income. Since stimulus payments were primarily designed to support individuals and families during economic hardship, your situation makes you a prime candidate for eligibility.
- COBRA Doesn’t Disqualify You: Your health insurance status (whether it’s COBRA, Medicare, Medicaid, or private insurance) has no bearing on your stimulus check eligibility. COBRA is simply a continuation of your prior employer’s health plan; it’s not a form of income or a disqualifying factor.
- Low Income is Key: With an income around $1,200 (monthly or annually, depending on when you received it relative to the tax year), you almost certainly fall well below the income thresholds for payment phase-outs. In fact, if $1,200 represents your total annual income for a relevant tax year (2019, 2020, or 2021), you’d be eligible for the full payment amount.
- Non-Filer Status: Many individuals with very low income aren’t required to file annual tax returns. The IRS recognized this and created mechanisms for "non-filers" to receive their payments. While the specific non-filer tool is no longer available for new submissions, the primary way to claim missing payments is now through your tax return.
The Primary Path: Claiming Missing Stimulus Payments Through Your Tax Return
If you didn’t receive one or more of the stimulus checks, the most common and current method to claim them is by filing a federal income tax return and claiming the Recovery Rebate Credit (RRC). This credit is essentially a way for the IRS to reconcile your eligibility for the stimulus payments based on your actual income and circumstances for the relevant tax year.
Crucially, each stimulus payment is tied to a specific tax year for the purpose of claiming the RRC:
- First EIP ($1,200 + $500 per child) and Second EIP ($600 + $600 per child): You claim these missing payments on your 2020 federal income tax return.
- Third EIP ($1,400 + $1,400 per child): You claim this missing payment on your 2021 federal income tax return.
Important Note: Even if you were not required to file a tax return because your income was too low, you must file a return to claim the Recovery Rebate Credit if you missed out on a stimulus payment. Filing a return is the only way the IRS can determine your eligibility based on your specific circumstances for that year.
Step-by-Step Guide to Claiming Your Stimulus Check(s)
Here’s how to proceed if you’re on COBRA with $1,200 income and believe you’re missing a stimulus payment:
Step 1: Determine Which Payment(s) You’re Missing
- Check Your IRS Account: The most definitive way to see if you received a payment is to create or log in to your IRS online account. This account provides information on your tax history, including the amounts of any Economic Impact Payments issued to you. Look for "Economic Impact Payment 1," "Economic Impact Payment 2," and "Economic Impact Payment 3."
- Review Bank Statements: Check your bank records for deposits from the "IRS TREAS 310" with a description like "TAX REF" or "IRS STIMULUS."
- Check Mailed Payments: If you don’t use direct deposit, look for mailed checks or debit cards. The IRS sent out millions of payments this way.
Knowing which payment(s) you’re missing will help you determine which tax year(s) you need to file or amend.
Step 2: Gather Necessary Documents
Even with low income, you’ll need some basic information to file your tax return:
- Social Security Number (SSN): For yourself and any qualifying dependents.
- Income Information:
- Form W-2: If you had any employment income (even part-time or temporary).
- Form 1099-G: If you received unemployment benefits (these are taxable income and can impact your AGI, though they won’t disqualify you from stimulus).
- Form 1099-MISC or 1099-NEC: If you had self-employment or gig economy income.
- Any other income statements: From interest, dividends, etc. (though likely minimal with $1,200 total income).
- Bank Account Information: For direct deposit of your refund.
- Prior Year’s AGI (if filing electronically): If you filed a tax return in the previous year, you’ll need your Adjusted Gross Income (AGI) from that return to verify your identity when e-filing. If you didn’t file, you can enter $0 for prior-year AGI.
Step 3: Choose Your Filing Method
Even if you have very little or no taxable income, you have several options to file your tax return:
- IRS Free File Program: If your AGI is below a certain threshold (typically around $79,000 for 2023 tax year, but check the IRS website for the specific year you’re filing for), you can use free tax preparation software offered through the IRS Free File program. These are commercial software products made available for free to eligible taxpayers. This is often the easiest option for low-income individuals.
- IRS Free File Fillable Forms: If your income is above the Free File threshold or you’re comfortable doing your taxes yourself without guidance, you can use these electronic forms directly from the IRS.
- Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) Programs: These programs offer free tax help to qualified individuals, including those with low to moderate incomes, people with disabilities, and the elderly. IRS-certified volunteers provide free basic income tax return preparation. This is an excellent option if you need in-person assistance. You can find a VITA/TCE site near you on the IRS website.
- Commercial Tax Software: While these often come with a fee, many offer free versions for simple tax situations, or a reduced fee.
- Tax Professional: A paid tax preparer can help, but for a simple return claiming RRC, free options are usually sufficient and more cost-effective.
Step 4: File Your Tax Return (Claiming the Recovery Rebate Credit)
When you prepare your tax return for the relevant year (2020 for the first two EIPs, 2021 for the third), the tax software or preparer will guide you through claiming the Recovery Rebate Credit.
- On Form 1040 (U.S. Individual Income Tax Return): The Recovery Rebate Credit is claimed on Schedule 3 (Additional Credits and Payments), specifically on Line 30.
- The software will ask you questions about the stimulus payments you received (or didn’t receive) and calculate the credit amount based on your eligibility for that tax year.
- Be Accurate: Double-check the amounts of any stimulus payments you did receive. If you overstate what you’re owed, it will delay your refund.
Step 5: Elect Direct Deposit
When filing, always choose direct deposit for your refund. It’s the fastest and most secure way to receive your money. Ensure your bank account and routing numbers are correct.
Step 6: Track Your Refund
Once you’ve filed, you can track the status of your refund using the IRS’s "Where’s My Refund?" tool on their website. It typically takes a few weeks for the IRS to process a return and issue a refund, especially if it’s an original return for a prior year.
Important Considerations and FAQs
- Deadlines: While the official tax filing deadline for 2020 and 2021 has passed, you generally have three years from the original due date of the return to file and claim a refund. For example, for your 2020 return (due April 15, 2021), you generally have until April 15, 2024, to file and claim the RRC. For your 2021 return (due April 18, 2022), you generally have until April 18, 2025. Don’t delay!
- What if I Already Filed But Didn’t Claim It? If you filed your 2020 or 2021 tax return but didn’t claim the Recovery Rebate Credit, you’ll need to amend your tax return using Form 1040-X, Amended U.S. Individual Income Tax Return. This is a more complex process than filing an original return, so consider using tax software that supports amendments or seeking VITA/TCE assistance.
- Dependents: If you have qualifying child dependents, ensure you claim them on your tax return, as they could increase your stimulus payment amount.
- Scams: Be wary of scams. The IRS will never contact you by phone, email, or social media asking for personal or financial information to "process" your stimulus payment. All legitimate communication will come through official mail.
- Keep Records: Always keep copies of your filed tax returns and any related documents for your records.
Don’t Leave Money on the Table
While the stimulus payments were a few years ago, the opportunity to claim them via the Recovery Rebate Credit is still available for a limited time. If you were on COBRA with limited income during the pandemic, you were precisely the kind of individual these payments were designed to help.
Don’t let the complexity deter you. Utilize the free resources available through the IRS Free File program or VITA/TCE sites. Taking action now can put valuable funds back in your pocket, providing much-needed financial relief.