By Quentin Fottrell, MarketWatch
I wanted to share how my small oversight turned into a much larger problem. It all revolves around the timing of my family’s stimulus checks, and some inheritance from my late father in 2019.
In the first round of the economic stimulus last year, we received the full amount for our family of four. I intentionally waited to file my 2019 taxes last year, so that payment would be based on our 2018 returns. My dad passed away in 2019, and he left us just enough.
For the second round, however, I didn’t have much choice. It was based on 2019 tax returns, and there was no way around it. So our income was higher and we received $1,900 instead of $2,400. I was OK with that. But the actual amount on the check was $1,911, not $1,900, and therein lies the problem.
Our third stimulus is once based again on our 2019 tax return instead of 2020. I got our new Economic Impact Payment card last week, and the amount on it is only $131.04, instead of $5,600.
For round three, I wanted to rush through my taxes so the stimulus payment would NOT be based on my 2019 taxes, but rather on our more typical income that we received in 2020. We were due to get the full amount, which is $5,600 for the four of us.
But when I did my 2020 taxes, I was pleasantly surprised to learn that I could get that extra $500 from the second round if I filled in the blanks correctly on my tax return. Turbo Tax /zigman2/quotes/203136605/composite INTU +2.44% , to its credit, advised me to enter exactly the correct stimulus I got for Round 2 to avoid a delay.
I should have listened. I thought it was a safe bet to leave it at $1,900 — not $1,911. There’s my mistake. We are due a tax refund of about $5,400 for 2020, because we made a sizeable donation to charity last year with some of my father’s inheritance. I filed our taxes well over a month ago, but it still only says “received” when I check the status. I think it’s because of my $11 mistake.
Because of this delay, our third stimulus is once based again on our 2019 tax return instead of 2020. I got our new Economic Impact Payment card last week, and the amount on it is only $131.04, instead of $5,600. I’ve since learned that I can claim this money, but not until next year when I file my 2021 taxes.
So because of my mistake, I’m still waiting for our $5,400 refund, and our $5,600 stimulus payment, for up to a year. Ouch.
What say you?
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Ouch is right.
I commend your stoicism in the face of your delay. And it is only a delay. That’s the good news.
Here are the instructions from the IRS: “If there’s a mistake with the credit amount on Line 30 of the 1040 or 1040-SR, the IRS will calculate the correct amount, make the correction and continue processing the return. If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change.”
Here are some common reasons the IRS may have to correct the credit: You were claimed as a dependent on another person’s 2020 tax return. You did not provide the correct Social Security number. And math errors relating to calculating adjusted gross income and (where you were hoisted on your own petard) previously-paid economic impact payments.
‘You have also touched upon one of the most challenging aspects of the coronavirus pandemic: the waiting game.’
“Taxpayers who receive a notice saying the IRS changed the amount of their 2020 credit should read the notice,” the IRS adds. “Then they should review their 2020 tax return, the requirements and the work sheet in the Form 1040 and Form 1040-SR instructions .” You can also check here for additional information to explain what other mistakes may have occurred.
You are in a fortunate position, of course. You will survive without the check. But you have also touched upon one of the most challenging aspects of the coronavirus pandemic: the waiting game. You think your stimulus check is on the way, but then you realize you filled out a form incorrectly. Or you believe that restaurants will open up again and they do, until they don’t.
Behavioral economist George Loewenstein wrote about this phenomenon in an essay for MarketWatch. “One of the things that makes waiting most unpleasant is uncertainty,” he said. “This is even true of good things. Waiting for a date or a vacation or a wedding that one is confident will happen can be mildly pleasurable, but the tiniest bit of uncertainty, and the pleasure is gone.”
You know that your stimulus check is coming. I am glad you have chosen to take pleasure in that.
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