The COVID-19 pandemic brought unprecedented challenges, and in response, the U.S. government issued several rounds of Economic Impact Payments (EIPs), commonly known as stimulus checks. These payments were a lifeline for millions, designed to provide immediate financial relief. However, a significant number of eligible individuals, particularly those with tax-exempt income, encountered unique hurdles in receiving their payments.
For many, stimulus checks were automatically deposited into bank accounts or mailed as paper checks, based on information the IRS had from filed tax returns or federal benefit agencies. But what if you primarily receive tax-exempt income, meaning you aren’t typically required to file an annual tax return? This often left individuals, who were precisely among those most in need of assistance, feeling overlooked and confused.
If you receive income that isn’t taxed – such as certain Social Security benefits, Supplemental Security Income (SSI), VA benefits, or other forms of public assistance – and you believe you missed out on one or more stimulus checks, this comprehensive guide is for you. We’ll explain why this challenge arose, the specific pathways the IRS provided, and most importantly, how you can still claim any missed payments through the Recovery Rebate Credit.
Understanding the Stimulus Checks and Their Eligibility
Before diving into how to claim a missed payment, it’s crucial to understand the three main rounds of Economic Impact Payments:
- EIP 1 (CARES Act, 2020): Up to $1,200 per eligible adult and $500 per qualifying child dependent.
- EIP 2 (Consolidated Appropriations Act, 2021): Up to $600 per eligible adult and $600 per qualifying child dependent.
- EIP 3 (American Rescue Plan, 2021): Up to $1,400 per eligible adult and $1,400 per qualifying child dependent.
Generally, to be eligible for these payments, you needed to be a U.S. citizen or resident alien, have a valid Social Security Number (SSN) for yourself (and for any qualifying children), and not be claimed as a dependent on someone else’s tax return. There were also income thresholds; payments began to phase out above certain Adjusted Gross Income (AGI) levels.
The IRS primarily used information from 2018 or 2019 tax returns for EIP 1 and 2, and 2019 or 2020 tax returns for EIP 3, to determine eligibility and payment amounts. For federal benefit recipients (Social Security, SSI, VA, Railroad Retirement), the IRS worked directly with the respective agencies to send payments, often without the need for a tax return.
The Core Challenge: Tax-Exempt Income and the Non-Filer Dilemma
The fundamental problem for many individuals with tax-exempt income was simple: no tax return, no data.
If your income consisted solely of sources that are not taxable by the IRS (e.g., most Social Security benefits, SSI, certain VA disability payments, welfare benefits, child support, certain disability payments, etc.), you might not have had a requirement to file an annual federal income tax return.
While the IRS did make efforts to reach out to non-filers, particularly through agencies like the Social Security Administration (SSA) and Department of Veterans Affairs (VA), these efforts weren’t always comprehensive.
- Automatic Payments for Federal Benefit Recipients: Many individuals receiving Social Security retirement or disability benefits (SSDI), Supplemental Security Income (SSI), Railroad Retirement benefits, or certain VA benefits did receive their stimulus payments automatically. The IRS used the payment information (bank account or mailing address) already on file with these agencies.
- The "Non-Filer Tool": For a limited time in 2020, the IRS launched a "Non-Filers: Enter Payment Info Here" tool. This online portal allowed individuals who weren’t required to file a tax return to quickly provide their basic information (name, address, SSN, bank account) so the IRS could process their stimulus payment. This tool was a critical lifeline for many, but it was temporary and is no longer available.
- The Gap: Despite these efforts, some individuals with only tax-exempt income still fell through the cracks. This could be due to:
- They didn’t receive federal benefits that triggered an automatic payment.
- They didn’t use the Non-Filer Tool before it closed.
- They experienced a change of address or bank account that the IRS didn’t have updated information for.
- They were eligible for additional payment for dependents but the IRS only had information for the adult(s).
Your Pathway to Claiming Missed Stimulus Checks: The Recovery Rebate Credit
If you missed out on one or more stimulus checks, or received less than the full amount you were eligible for, the good news is you can still claim the money. The primary and current method for doing so is through the Recovery Rebate Credit (RRC) when you file your federal income tax return.
The Recovery Rebate Credit is essentially a way for the IRS to reconcile the Economic Impact Payments. If you were eligible for a stimulus payment but didn’t receive it, or received less than the full amount, you can claim the difference as a refundable tax credit on your tax return. A refundable credit means that if the credit amount is more than any tax you owe, you’ll receive the difference as a refund.
Here’s how it works for each stimulus payment:
- For EIP 1 and EIP 2 (the first two payments): These are claimed on your 2020 federal income tax return.
- For EIP 3 (the third payment): This is claimed on your 2021 federal income tax return.
Crucial Point: Even if your income is entirely tax-exempt and you normally aren’t required to file a tax return, you must file a 2020 and/or 2021 tax return to claim the Recovery Rebate Credit. Filing this return is the only way for the IRS to verify your eligibility and process your payment now that the Non-Filer Tool is closed.
Step-by-Step Guide to Claiming Your Recovery Rebate Credit
Follow these steps to claim any stimulus money you are owed:
1. Determine Which Payments You Missed (and for Whom):
- Review your records. Did you receive EIP 1 ($1,200/$2,400 + $500 per child)? EIP 2 ($600/$1,200 + $600 per child)? EIP 3 ($1,400/$2,800 + $1,400 per child)?
- Did you receive the full amount you were eligible for, including payments for all qualifying dependents?
- Check your IRS Online Account: If you have an IRS.gov account, you can often view the amounts of any EIPs issued to you under the "Tax Records" section. This is a reliable way to confirm what the IRS has on record.
- IRS Notice 1444, 1444-B, 1444-C: If you received a stimulus payment, the IRS typically sent a notice confirming the amount. Keep these for your records.
2. Gather Necessary Information:
- Social Security Numbers (SSNs): For yourself, your spouse (if filing jointly), and all qualifying children claimed as dependents.
- Income Information: Even if tax-exempt, it’s good to have documentation of your income sources (e.g., SSA-1099 for Social Security benefits, VA letters, bank statements showing deposits). While most tax-exempt income doesn’t go on the return, you need to be able to confirm your total AGI was below the phase-out thresholds. For most individuals with only tax-exempt income, their AGI will be $0, which automatically qualifies them.
- Bank Account Information: For direct deposit of your refund.
- Previous Year’s AGI (if applicable): If you filed a 2019 or 2020 tax return, you might need your AGI from that return to verify your identity when e-filing.
3. Choose Your Filing Method:
- IRS Free File Program: If your AGI is below a certain threshold (it changes annually, but is generally around $79,000 for 2023 tax year filing), you can use commercial tax software provided through the IRS Free File program. This is often the easiest and most cost-effective way to file. Look for software that supports claiming the Recovery Rebate Credit.
- IRS Free File Fillable Forms: If your AGI is above the Free File threshold, or you’re comfortable doing your taxes yourself without guided software, you can use the IRS’s Free File Fillable Forms. This provides electronic versions of IRS paper forms.
- Tax Preparation Software: Purchase commercial tax software (e.g., TurboTax, H&R Block) and follow their prompts for claiming the Recovery Rebate Credit.
- Tax Professional: If your situation is complex, or you prefer assistance, a professional tax preparer can help.
- Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs: These IRS-sponsored programs offer free tax help to qualifying individuals (low-to-moderate income, elderly, persons with disabilities, those with limited English proficiency). They are an excellent resource for non-filers and can help with the Recovery Rebate Credit.
4. File Your Tax Return (2020 and/or 2021):
- On the tax form (Form 1040 or 1040-SR), locate the lines related to the Recovery Rebate Credit. For 2020, it’s on Line 30 of Form 1040. For 2021, it’s on Line 30 of Form 1040.
- Carefully calculate the amount of the credit you are claiming. The tax software or preparer will typically guide you through this, but you’ll need to input the amounts of any stimulus payments you did receive.
- Important: Even if your calculated tax liability is $0, you still need to file a return to claim the refundable credit. This credit will then be paid to you as a refund.
- E-file vs. Paper File: E-filing is generally faster and more accurate. However, if you are filing for a prior year (e.g., 2020 or 2021 now), you may need to paper file, especially if you didn’t e-file your original return for that year. Check with your chosen software or preparer.
5. 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 IRS.gov. It typically takes a few weeks to process, especially for paper-filed returns.
Important Considerations and Tips:
- Deadlines: While the general tax filing deadline for 2020 was April 15, 2021, and for 2021 was April 18, 2022, you typically have three years from the original due date of the return to claim a refund. This means you generally have until April 15, 2024, to file a 2020 return for a refund, and until April 15, 2025, to file a 2021 return for a refund. Don’t delay!
- "No Income" Still Qualifies: Many individuals with tax-exempt income effectively have a $0 AGI. This is perfectly fine and often simplifies the process of claiming the Recovery Rebate Credit, as you’re well below any income phase-out limits.
- Dependents are Key: Many non-filers who received automatic payments only received the adult portion. If you had qualifying children, ensure you claim the additional dependent amounts on your Recovery Rebate Credit calculation.
- Beware of Scams: The IRS will never call, text, or email you demanding immediate payment or personal information about your stimulus check. All legitimate communication will be through official mail.
- Keep Records: Maintain copies of everything you send to the IRS, including your filed tax return and any correspondence.
- Deceased Individuals: If a person was eligible for a stimulus payment but died before receiving it, their estate may be able to claim the Recovery Rebate Credit on their final tax return. However, if a payment was incorrectly sent to a deceased individual (e.g., after their death), it must generally be returned to the IRS.
Conclusion
Missing out on a stimulus check can be frustrating, especially when you were among those who needed the financial support most. While the initial distribution methods presented challenges for individuals with tax-exempt income, the Recovery Rebate Credit provides a clear and effective pathway to claim what you’re owed.
Don’t let the complexity deter you. By understanding the process, gathering your information, and utilizing the free resources available (like IRS Free File or VITA/TCE programs), you can still secure the Economic Impact Payments that were intended to help you. Take action now to claim your rightful funds before the filing deadlines pass.