IRS outlines scenarios that might explain why some got smaller COVID-19 relief checks

The IRS on Monday outlined several “common scenarios” explaining why some people received a smaller coronavirus relief payment than they expected.

Under legislation President Trump signed last month, the IRS is issuing one-time direct payments to most Americans of up to $1,200 per adult and $500 per child.

The agency has said that it has already issued about 130 million payments. But the rollout of the payments has caused confusion for some taxpayers, including some who have reported not receiving the full amount that they expected to get.

The IRS issued a news release on Monday that gave several suggested reasons why people may be seeing a difference between the amount they received and the amount they thought they were going to get.

One scenario that the IRS said could explain a difference between an expected and actual payment amount is when a taxpayer has yet to file his or her 2019 tax return, or the 2019 return has yet to be processed.

In those cases, the IRS would be basing the taxpayer’s payment of his or her 2018 tax return, which wouldn’t account for life changes that took place in 2019 such as a new child or a change in income, the IRS said. The agency added that parents who did not receive a payment amount for their children may be able to receive the additional amount when they file their 2020 tax return next year.

The IRS also said that some people may be receiving smaller payments than they expected if their dependents aren’t eligible for the payment.

Households are only entitled to a $500 payment for their dependents if their dependent is a child who is eligible for the child tax credit. The child must be under 17 at the end of the year of the tax return for which the payment was based.

As a result, households are not able to receive payments this year for college students who are claimed on their parents’ returns and other adult relatives claimed as dependents. However, the college students and adult relatives may be able to individually file a 2020 tax return next year and claim a $1,200 credit at that time, the IRS said.

Parents who aren’t married and don’t file joint returns can’t both claim their child as a dependent, so it may be the case that only the parent who claimed the child as his or her dependent for 2019 received a direct payment amount for the child. The parent who didn’t claim the child as a dependent on his or her 2019 tax return may be able claim an additional payment amount for the child when filing a 2020 tax return, the IRS said.

Additionally, the IRS said that payment amounts could have been offset by past-due child support or garnished by creditors. The IRS said that the Treasury Department’s Bureau of Fiscal Service will send taxpayers a notice in cases where payments were reduced because of past-due child support.

The IRS said that it will provide further details on its website in the future about actions people may need to take to claim additional credits on their 2020 tax return. The agency said that people should keep for their records the letters sent to taxpayers informing them of their payment amounts.