The IRS typically has 3 years to examine our tax returns. The tax authority may add more years if they discover a significant inaccuracy. Even though the likelihood of an audit is still low if one does occur and the IRS requests the payback of stimulus cash, there are four possible explanations.
You Made A Lot Of Money
Each of the 3 stimulus payments was dependent on a certain level of income. The size of their check was decreased as soon as that threshold was reached. It’s reasonable to believe that the IRS made mistakes by mailing a check (or two) to somebody who earned a lot of money to be qualified for payment, given the millions of checks that were deposited into bank accounts and addressed to residential addresses.
You Got Paid For A Deceased Person
It makes sense that the IRS did not have a comprehensive list of every death when it delivered the first check given that COVID-19 has killed over 1 million Americans. Let’s imagine your partner passed away in 2019, and by the time the IRS started paying checks in April 2020, you still hadn’t filed a return for the year 2020.
The $1,200 that your partner would have qualified for whether they were living was included in the cheque since the IRS was unaware that they were deceased. Although it’s unlikely that it will pursue anybody whose loved one passed away before 2020, it’s smart to be prepared just in case.
Being A Non-Resident Alien
All three stimulation checks were available to those who enrolled as resident immigrants. The IRS must receive the check that you received if you are a nonresident immigrant. If you haven’t already, the IRS can quickly identify this problem during a routine audit.
You Were Compensated “Extra”
There were so many checks sent that it’s probable that some recipients received multiple payments for the same cycle. Imagine you were expecting a $1,200 stimulus payment but found two $1,200 credits in your bank statement instead. The IRS is owed money on one of those.
As previously stated, if the IRS discovers an issue with a prior tax return, it will send you a letter. Study the letter thoroughly. If it seems that the IRS’s facts are incorrect, raise a disagreement. Make a check or money order payable to the U.S. Treasury for the money owed if it is obvious that the IRS letter is accurate. You should also provide a message explaining why you are returning the money, along with your number for Social Security or tax ID number. Don’t freak out if you do get a notification letter. As long as you are honest with them, working with the IRS is simple reports Fool.
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