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The IRS Is Calling People Out on Their Stimulus Tax Mistakes

How to know if you messed up the math—and what to do about it.

The United States government has never directly given normal people as much money as it has over the past year and change, during which it has sent three rounds of stimulus payments of various amounts out to millions of Americans. The novelty of the entire process has posed challenges on both sides, from IRS glitches that prevented money from going out promptly to a one-month delay to the tax filing deadline.

Stimulus payments have also sown confusion on the taxpayer side of the equation. Of those who didn’t receive stimulus checks that were owed to them, they’ve been using the Recovery Rebate Credit tool in order to get their owed stimulus money in their tax return. Filers, seeking only what is rightfully owed to them, have in many cases written the wrong amount in the relevant box. These mistakes are attracting letters from the IRS detailing the error and potentially delaying the delivery of already tardy payments to the folks who need them.

Here’s what you need to know about how to calculate the correct Recovery Rebate Credit and what you should do if you’ve already filed with the wrong amount and receive one of those letters in the mail.

Why are there so many mistakes?

There are lots of different factors that go into calculating the proper amount, and it’s easy to make a mistake that dramatically changes the amount you believe you’re owed. Having a kid, changing bank accounts, and changing filing status are all culprits, as are simple arithmetic errors.

There are also different maximum payment amounts for filers and their dependents and the need for those with slightly higher incomes in line for prorated payments to calculate what they’re owed.

What does the IRS do when it finds a mistake?

“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,” the IRS stated. In other words, the agency is recalculating to find the correct amount, which is certainly better than outright rejecting returns even though it likely means a delayed and diminished tax return.

How do you figure out the correct amount you’re owed?

The IRS has a handy tool that takes you step by step through the calculations they’re having to redo for so many people. To complete it, you need to know your income, filing status, and how much you received in stimulus payments, which the IRS terms economic impact payments (EIP 1 and EIP 2). If you don’t know this last piece of information, you can look it up at irs.gov/account.

Once you have that information, all you have to do is follow the instructions to complete the Recovery Rebate Credit Worksheet. It’s tedious but worth it to file a correct return and receive the money you’re owed more promptly. And if you’ve already filed but received a letter, you can redo the math to make sure that the amount now being sent to you is actually correct.