How to Return a Stimulus Check to the IRS

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In the wake of the COVID-19 pandemic, millions of Americans received stimulus checks from the government. Formally referred to as Economic Impact Payments, these funds provide relief to those affected by the economic crisis and ease financial management.

According to the Internal Revenue Service (IRS), every stimulus payment is based on income, tax filing status and the number of children or qualifying dependents.

To date, there have been three roll-outs of stimulus packages. The most recent is the American Rescue Plan Act, passed in March 2021. This plan provided $1,400 stimulus checks to those who were eligible. A fourth stimulus is being discussed with each state coming up with their plans.

However, with the speedy passing of these stimulus packages, some individuals may have received payments even though they weren’t supposed to. And now, the IRS is asking for that money back.

Why You’ll Have to Return a Stimulus Check

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The IRS has been sending out letters to some recipients asking to return the money. That’s because previous stimulus payments were largely based on 2018 and 2019 tax returns — and some people’s situations may have changed since then.

There are three instances that you might have to return your stimulus check, even if you initially received it:

You’re a “Non-resident Alien”

Qualifications for a stimulus check include being a U.S. citizen or resident alien. If you aren’t either and received a payment, you will have to return the money to the IRS. Several non-citizens received stimulus check because their records were included in the federal government system. In that case, the IRS may ask you to return the money.

You don’t have a Social Security Number (SSN)

People with Taxpayer Identification Number (TIN) received stimulus checks. However, the IRS says those without an SSN are not eligible for the payment. Although there were talks about sending stimulus money to those with other types of identification numbers, it never materialized. So if you received a stimulus check but didn’t have an SSN, you’ll likely have to return the payment.

Your income is too high

Financial aid is supposed to go to those who need it the most. If your income is too high, you might have to look for other ways to get a saving on taxes and return the check. Those with gross income of less than $75,000 got a stimulus check of the entire payment. The amount decreased incrementally for those with incomes up to $99,000. If your AGI exceeds that, but you still got the payment, you will have to return the stimulus check.

How Do You Return a Stimulus Check?

You can return stimulus check to IRS in several ways. According to the website, the way to return the stimulus check depends on if it was a paper check or a direct deposit.

1. If you received your stimulus payment as a paper check

You can simply void the check and mail it back to the IRS. Make sure to write “Void” in big letters on the check. Then, enclose a note stating that you are returning the stimulus payment because you weren’t eligible for it. The address to return the stimulus check should be based on the state in which you live.

2. If you received your stimulus payment as a direct deposit in your bank account

You can use a personal check or money order to make the repayment and address to return the economic impact payment to the “United States Treasury.” You should write “EIP” along with your taxpayer identification number in the memo. Again, include a note explaining that you are returning the stimulus payment because you weren’t eligible.

What Happens If You Don’t Return a Stimulus Check?

The IRS has been lenient and not actively pursuing those who haven’t returned stimulus payments, but the government is urging people to return the money to help those most in need of personal finance.

However, that could change in the future. The agency could eventually start trying to recover such payments issued in error. So it’s best to return the stimulus check as soon as possible to avoid penalties or late fees.

How Do You Handle a Stimulus Check for a Deceased Person?

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Stimulus payments were also mistakenly sent to deceased individuals. According to government estimates, as many as 1.1 million payments, totaling about $1.4 billion, were issued to dead people. The agency is now working on correcting this error by sending letters to those who received checks for deceased relatives.

If you received a check on behalf of deceased family members or friend, you should return the money to the IRS. However, unless the payment was made jointly, you aren’t required to return the entire amount. You’ll only have to return the portion of the payment that was made on behalf of the deceased spouse.

How Do I Return a Stimulus Check for a Deceased Person?

The government has been asking people to return stimulus payments made on behalf of someone who died. But the process might confuse those who don’t understand how to return a stimulus check for a dead person.

According to the website, you can return a stimulus check of a deceased relative similarly to any other stimulus payment. You can find where to return stimulus checks for deceased person information on the government website.

What Happens if I Don’t Return a Decedent’s Stimulus Check?

Voluntary returns of stimulus payments made on behalf of the deceased relative have reached $72 million, according to a Treasury Department report. On the other hand, about $872 million in stimulus payments were rejected by banks or returned to the IRS as undeliverable.

Although a significant number of people still have not returned the stimulus payment, the government has not announced any plans about what to do with those who don’t return the money. Like other stimulus money issued in error, it’s possible that the agency could eventually start trying to recover stimulus payments. Therefore, it’s in your best interest to return the stimulus check as soon as possible.

For many people, the stimulus payment was a much-needed financial boost. But for some, the payments were issued in error. Although you may be in a financial slump, returning the stimulus check is essential if you weren’t eligible for it. There are other ways to get help if you need it.

Several alternative government programs exist to support those who are struggling. These include financial support for entrepreneurs struggling in managing business taxes, SBA disaster loans for small businesses, and unemployment benefits. You can also look into private options like crowdfunding or personal loans from friends and family.

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