The COVID-19 pandemic brought unprecedented challenges, and for many low-income families and individuals, the economic impact was particularly severe. In response, the U.S. government passed the CARES Act in March 2020, which included direct financial assistance in the form of Economic Impact Payments (EIPs), often referred to as "stimulus checks." The first of these payments, widely remembered as the "first stimulus check," provided up to $1,200 for eligible individuals and an additional $500 per qualifying child.
While millions received this payment automatically, a significant number of low-income individuals, especially those who don’t typically file tax returns, may have missed out. This article aims to demystify the process and provide a comprehensive, step-by-step guide for low-income individuals to understand their eligibility and claim the $1,200 stimulus check (and any accompanying dependent payments) they may still be owed.
It’s crucial to understand that while we often speak of "getting" a stimulus check, for most people who missed the initial direct payments, it’s now about claiming a tax credit on a past tax return. This credit is known as the Recovery Rebate Credit (RRC).
Understanding the $1,200 Stimulus Check: The CARES Act EIP1
The first Economic Impact Payment was designed to provide rapid relief. Here’s a quick recap of its core components:
- Amount: Up to $1,200 for eligible individuals, $2,400 for married couples filing jointly, plus $500 for each qualifying child under age 17.
- Eligibility: Generally, U.S. citizens or resident aliens with a valid Social Security number who were not dependents of another taxpayer and had adjusted gross income (AGI) up to $75,000 ($150,000 for married couples filing jointly, $112,500 for heads of household). The payment phased out above these thresholds.
- Automatic Payments: Most people received their payments automatically if the IRS had their information from 2018 or 2019 tax returns, or if they received federal benefits like Social Security, Supplemental Security Income (SSI), Railroad Retirement benefits, or Veterans Affairs benefits.
- The Catch for Non-Filers: If you were low-income and didn’t typically file taxes because your income was below the filing threshold, and you weren’t on federal benefits, the IRS might not have had your information. A special "Non-Filers Tool" was created to help these individuals provide their information, but that tool is no longer available.
The Primary Method to Claim Your Payment: The Recovery Rebate Credit
If you did not receive the full amount of the first $1,200 stimulus check (and any additional $500 per dependent) or any of it at all, the only way to claim it now is by filing a 2020 federal income tax return and claiming the Recovery Rebate Credit (RRC).
Why the 2020 Tax Return?
The Economic Impact Payments were essentially advance payments of the 2020 Recovery Rebate Credit. When you file your 2020 tax return, the IRS recalculates your eligibility based on your 2020 income and other factors. If you were eligible for a payment you didn’t receive, or only received a partial payment, the RRC will be added to your tax refund or reduce the amount of tax you owe. For many low-income individuals, this means a larger refund.
Key Point: Even if you typically don’t earn enough money to be required to file a tax return, you must file a 2020 tax return to claim the Recovery Rebate Credit if you missed the first stimulus check. There is no penalty for filing a late return if you are due a refund.
Step-by-Step Guide for Low-Income Individuals
Here’s how to navigate the process:
Step 1: Determine Your Eligibility for the 2020 Recovery Rebate Credit
To claim the RRC on your 2020 tax return, you must meet the following criteria for 2020:
- Not a dependent: You cannot be claimed as a dependent on someone else’s tax return.
- Valid SSN: You must have had a valid Social Security number (SSN) issued before the due date of your 2020 tax return (including extensions).
- Adjusted Gross Income (AGI): Your AGI must have been within the thresholds ($75,000 for single filers, $150,000 for married filing jointly, etc.). For low-income individuals, this is rarely an issue as their AGI is typically well below these limits.
- Residency: You must have been a U.S. citizen or U.S. resident alien in 2020.
- Qualifying Child: If claiming the $500 for a child, they must have been under age 17 at the end of 2020, have a valid SSN, and be your qualifying child.
Step 2: Gather Your Information
Before you start preparing your 2020 tax return, collect the necessary documents:
- Social Security Numbers (SSNs): Your SSN and the SSNs for any qualifying children you are claiming.
- Income Information (if any):
- Form W-2: If you worked.
- Form 1099-NEC/MISC: If you worked as an independent contractor.
- Form 1099-G: If you received unemployment benefits.
- Form SSA-1099 or RRB-1099: If you received Social Security or Railroad Retirement benefits (these usually don’t need to be reported if they are your only income source and below certain thresholds, but having them is good).
- Other income records: Any other income you received (e.g., from odd jobs, gig economy).
- Bank Account Information: Your bank account and routing numbers for direct deposit of your refund. This is the fastest and safest way to receive your payment.
- Address: Your current mailing address.
- Identity Protection PIN (IP PIN): If the IRS issued you one for 2020.
What if I have no income or very little income?
Many low-income individuals may have had little to no taxable income in 2020. This is perfectly fine! You can still file a tax return to claim the Recovery Rebate Credit. In this scenario, your income sections on the tax form would simply show $0 or very low amounts.
Step 3: Choose Your Free Tax Filing Method
The IRS offers several options for free tax filing, which are ideal for low-income individuals:
IRS Free File Program:
- Who it’s for: Taxpayers with an Adjusted Gross Income (AGI) of $79,000 or less in 2024 (this limit changes annually, but generally covers low-income individuals for past returns).
- How it works: This program provides access to free tax preparation software from leading tax software companies. You access these products through the IRS website (IRS.gov/freefile). The software will guide you through the process, including claiming the Recovery Rebate Credit.
- Why it’s good: It’s user-friendly, accurate, and completely free.
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) Programs:
- Who it’s for:
- VITA: Generally for people who make $64,000 or less, persons with disabilities, and limited English-speaking taxpayers.
- TCE: For taxpayers aged 60 and older, with a focus on pension and retirement-related issues.
- How it works: These programs offer free tax help from IRS-certified volunteers. They can help you prepare and e-file your tax return, including claiming the Recovery Rebate Credit. This is an excellent option if you prefer in-person assistance or have complex situations for a low-income filer (e.g., claiming other credits like EITC).
- How to find a site: Use the IRS VITA/TCE Locator tool on IRS.gov or call 800-906-9887.
- Who it’s for:
Low Income Taxpayer Clinics (LITCs):
- Who it’s for: Individuals whose income is below a certain threshold and who need assistance with tax disputes with the IRS, or who need help understanding their taxpayer rights and responsibilities. While not primarily a tax preparation service, LITCs can sometimes assist taxpayers in filing past-due returns to claim credits like the RRC, especially if there are complicating factors.
- How to find a clinic: Visit the LITC page on IRS.gov.
Important Note on Filing Deadlines: While the general deadline for filing a 2020 tax return has passed, there is no penalty for filing late if you are owed a refund. You generally have three years from the tax deadline to claim a refund. For the 2020 tax year, this means you typically have until July 15, 2024 (given the extended COVID-19 deadlines) to file and claim your Recovery Rebate Credit. Don’t delay!
Step 4: Completing Form 1040 and Claiming the Recovery Rebate Credit
When you use tax software or work with a VITA/TCE volunteer, they will guide you through the process. However, for your awareness, the Recovery Rebate Credit is claimed on Line 30 of your 2020 Form 1040 (U.S. Individual Income Tax Return).
The tax software or volunteer will ask you questions about how much stimulus payment you received in 2020. It’s crucial to answer these questions accurately. If you received no payment, you’ll indicate that, and the software will calculate the full $1,200 (plus any dependent amount) for you. If you received a partial payment, it will calculate the difference.
Step 5: File Your Return and Await Your Refund
Once your return is complete, submit it electronically (e-file) if possible. E-filing is the fastest and most secure way to submit your return and receive your refund. If e-filing isn’t an option (e.g., due to system limitations for very old returns), you’ll need to print and mail your return.
- Direct Deposit: If you provide your bank account information, your refund will be deposited directly into your account.
- Paper Check: If you don’t provide bank information, the IRS will mail you a paper check. This takes significantly longer.
You can check the status of your refund using the IRS "Where’s My Refund?" tool on IRS.gov, typically 24 hours after e-filing or several weeks after mailing.
Special Considerations and FAQs
I Received Federal Benefits (Social Security, SSI, VA, Railroad Retirement) But Didn’t Get My Payment:
- Most federal benefit recipients should have received their payments automatically. If you didn’t, it might have been due to outdated address or bank information the IRS had on file.
- You can still claim it via the 2020 Recovery Rebate Credit on your tax return.
- Note: The IRS received information from these agencies, so you generally didn’t need to use the Non-Filers Tool back in 2020. If you did use the Non-Filers Tool and were on federal benefits, it sometimes caused complications, but the 2020 RRC should correct it.
What if I moved?
- If you moved and the IRS mailed a check to an old address, it would have been returned to the IRS. Filing a 2020 return with your current address and direct deposit information will ensure you receive it.
Will claiming this affect my other benefits (SSI, SNAP, Medicaid, Housing)?
- No. The Economic Impact Payments and the Recovery Rebate Credit are generally not counted as income for purposes of determining eligibility for federal means-tested programs like SSI, SNAP (food stamps), Medicaid, or federal housing assistance. They also do not affect your eligibility for other federal benefits.
Is the stimulus check taxable?
- No. The stimulus payments (and thus the Recovery Rebate Credit) are not taxable income. You do not need to report them as income on your tax return.
Beware of Scams!
- The IRS will never call, text, email, or contact you on social media asking for your Social Security number, bank account information, or other personal details to "help" you get your stimulus payment. All legitimate communication will be through official mail. If in doubt, assume it’s a scam.
Don’t Leave Money on the Table
For low-income individuals, every dollar counts. The $1,200 stimulus check (plus any dependent payments) can be a significant boost, helping with essential needs, paying down debt, or building a small emergency fund. While the initial wave of payments has passed, the opportunity to claim this money through the 2020 Recovery Rebate Credit is still available.
Don’t be intimidated by the tax filing process. Utilize the free resources available through IRS Free File, VITA, and TCE programs. These services are specifically designed to help people in your situation navigate the tax system and ensure they receive the financial relief they are entitled to. Act now to claim what’s rightfully yours and bring some much-needed financial stability into your life.