Stimulus checks of $500 are given to parents with qualified children based on the government's criteria. Parents who missed to file their federal income tax for 2018 or 2019 had to take an extra step in the past spring to receive the payment. Due to the glitch in the IRS non-filer tool, people who filed before May 5, 2020, may not have received the promised money per child yet.
Reopening of the non-filer tool
The IRS has reopened the non-filer tool to correct the mistake. From August 15 to September 30, parents can enter information for their eligible children. Those who missed the deadline can file a 2020 tax return next spring and still claim their $500.
The past spring, millions of Americans have received economic impact payments thanks to the Coronavirus Aid, Relief, and Economic Security Act. The stimulus checks with a maximum amount of $1,200 were given to adults with less than $99,000 income yearly, and those who have children below 17 got $500. Based on their 2018 or 2019 tax returns, most people did not have to do anything to get the money. However, non-filer parents who missed to input their children's information may have not received the stimulus payment yet.
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The error meant some did not receive the payment
Co-leader of EisnerAmper New York, Timothy Speiss, said that the IRS found out a problem for those who did not file a tax return. The non-filers tool was launched in spring, so people who are not required to file their taxes could get the stimulus checks. A programming error of the said tool meant that money for some children was not given. Even though they corrected the error in mid-May, early users of the tool were not able to benefit from the correction.
Non-filers who have not yet used the IRS tool to claim their checks should access the tool before September 30. Parents who accessed the tool before May 5 should input their children's information again. For those who have accessed the tool after May 5, they do not have to do anything.
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A CPA and senior tax manager with accounting firm Friedman LLP, Kirsten Toler, said that people who has not used this tool yet but plans to file for 2019 should not use it. If they do, they are delaying the process. Eligible low-income households could receive a fund since credit is refundable.
Where to use stimulus payment
Parents may expect to receive the payments this fall. It means that they still have time to think about where to use the money. Speiss suggests that they could use it to pay down high-interest-rate debt. Parents could also deposit the money in a savings account with a high yield.
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Parents may also choose to invest the money like a 529 account. It will help their money grow and they could withdraw it tax-free for qualified education expenses. Toler advises everyone to spread the word because you will never know who can benefit from this update.
