Dear Penny: What Can You Do if Your Stimulus Check Came Up Short?

A married couple spend time with their infant in their bed.
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Dear Penny,

My daughter was single when she filed her 2018 tax return. In 2019, she had a child and also was married in August 2019. Their accountant e-filed their joint 2019 tax return on March 28, 2020. 

They both received stimulus checks based on their 2018 statuses, it appears. Their adjusted gross income was $158,723 in 2019, and by the stimulus calculator they should have received $2,464. 

My daughter received $366.60 on April 15, and her husband received $1,200 on May 6. By my math, they were shorted $897.40 by using their 2018 tax return with no credit for their child. Any advice on this issue?


Dear L.,

It sounds like your daughter and her husband did everything right: They filed in plenty of time and did so electronically.

But for many people who filed their 2019 returns shortly before the coronavirus checks started going out, the question of whether the IRS would use the 2018 return or the 2019 return came down to luck. 

Yes, the IRS said they would use your 2019 return if they had one for you — but for some people, like your daughter and her husband, the IRS processed the stimulus check before they processed the return.

Unfair? It may seem that way. But keep in mind just how quickly the IRS was working to get that much-needed stimulus money into the hands of struggling Americans. 

By the time stimulus checks were approved as part of the CARES Act, the IRS had already extended the tax deadline for 2019 returns to July 15. Using 2018 returns instead of waiting for a 2019 return to be processed helped to get those payments out faster.

Your daughter and her family could get more stimulus money — but it will depend on their 2020 return. That’s because the payments were actually an advance on a 2020 tax credit. Ordinarily, you have to wait until you file your return to get a tax credit, but again, the stimulus payments were made based on 2018 or 2019 returns so that we could get the relief money ASAP.

In this case, it’s a win-win: Suppose your daughter and son-in-law earned more in 2018 than they will in 2020, which will likely be the case for many people in this economy. 

If their 2020 AGI is below $150,000 — the point at which stimulus payments are reduced by 5 cents on the dollar for couples filing a joint return — they’d actually qualify for a $2,900 payment: $2,400 for the two of them, plus $500 for your granddaughter. So they’d receive an additional $1,333.40 as a credit when they file their 2020 return, since they’ve already received a combined $1,566.60.

And if their 2020 income is higher than it was in 2018? They’d still get to hang onto the payments they received, plus they’d be eligible for the $500 credit on behalf of their daughter, though keep in mind that this credit is also subject to the 5 cents-on-the-dollar phaseout. 

A lot of people will have more stimulus money coming their way when they file their 2020 taxes, regardless of whether Congress approves a second round of checks. They include people who had a child in 2020 (or 2019 in some cases), people whose income has taken a hit and those who can no longer be claimed as dependents.

Unfortunately, it seems that those who received less stimulus money in error will have to wait until they file a 2020 return to have the situation corrected. 

Just know that this is one of those cases where the math works in your favor: You get more money if your 2020 return shows you were paid too little. You get to keep the money if it shows you were technically paid more than you should have been. And best of all, you won’t owe taxes on any of it.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to [email protected].