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While roughly a million Americans qualify for unclaimed $1,400 stimulus checks this year, the majority of taxpayers are not eligible for the 2021 Recovery Rebate Credit anymore.
However, the Internal Revenue Service has been urging taxpayers to file their 2021 taxes before April 15 in order to claim any tax refunds they missed. That includes the stimulus check, but those Americans who attempt to claim the money a second time could face significant consequences.
Why It Matters
The Recovery Rebate Credit is worth $1,400 and was originally sent to Americans to help them financially during the coronavirus pandemic. Millions of Americans eligible for the rebate did not file their taxes for that year and missed out on the payments.
What To Know
Taxpayers who attempt to wrongly collect the stimulus check a second time may find the IRS blocks their attempts in its system, according to an IRS spokesperson.
However, if you are able to earn the stimulus check a second time, you run the risk of having the IRS ask for the money back with penalties and interest, the spokesperson told Newsweek.
Roughly 1.1 million Americans have refunds worth more than $1 billion still held for them by the IRS, but after April 15, this money will go back to the Treasury.
That does not mean you should try to claim stimulus money a second time, and doing so could lead to substantial fines and problems down the road.
Those who qualified for the Recovery Rebate Credit will see the money via paper check or direct deposit as long as their adjusted gross income was no more than $75,000 in 2021.
For married couples, that amount goes up to $150,000 for the tax year 2021.
What People Are Saying
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek: “In most cases, the IRS already has this in their system and will catch the error before issuing the payment. That said, mistakes do happen. If the IRS sends out money by mistake, they will eventually claw it back—likely with interest.”
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “If someone’s already received that third stimulus payment or claimed it on a previous tax return, trying to double-dip could really come back to bite them. We’re talking about a 20 percent penalty right off the bat. That’s $280 on a $1,400 claim! And then there’s daily compounding interest until it’s paid back. Ouch.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “When Americans hear about a new round of stimulus checks being mailed out, obviously there’s excitement and a desire to tap into that funding, if possible. The problem is these aren’t “new” checks, but rather make-up payments for a small group of around one million taxpayers who missed out on initial stimulus funding in 2021. Even if you make it through the IRS’s system or a third-party tax service to “requalify” for a payment, you’re in the wrong, and if the IRS discovers what you’ve done, they can absolutely claw that money back and fine you. Don’t do it.”
What Happens Next
If the IRS mistakenly sends out a second stimulus check for 2021, the agency will recover the money, which could potentially lead to debt down the road, Thompson said.
“Waking up to an unexpected debt can be a real financial hit. And unfortunately, even if the mistake is on the IRS’s end—much like Social Security overpayments—you’re still responsible for paying it back,” Thompson said.
Ryan said once taxpayers are flagged for incorrect claims, the IRS will likely put a permanent note in their file.
“Future returns might get extra scrutiny, refunds could be delayed, and it might even affect other legitimate credits you’re trying to claim,” Ryan said. “What people really need to know is that while this is a legitimate opportunity for those who truly missed out, it’s not worth risking your financial future over an improper claim. The IRS doesn’t play around with this stuff, and the penalties can haunt your tax situation for years.
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