The IRS is mailing all recipients of Economic Impact Payments a Notice 1444 that provides information about the amount of their payment, how the payment was made, and how to report any payment that wasn’t received. If you’ve already received your economic impact payment, you’ve probably already received this document too. This notice was issued from The White House and looks more like a letter than a traditional IRS notice, but the notice number is in the upper right of the heading, just below the date.
For security reasons, the IRS mails this notice to each recipient’s last known address within 15 days after the payment goes out. Don’t discard this notice, as you may need it when your 2020 tax return is prepared. The economic impact payment is actually an advance payment of a refundable tax credit based upon your 2020 tax return. In order to get the money into people’s hands during the time of the greatest need, these payments generally were made based upon each individual’s 2019 return, or in some cases their 2018 return.
However, your filing status, income, and dependents may be different in 2020, and if the advance payment was less than what you are entitled to based upon the 2020 return, you will qualify for the difference as a refundable credit on your 2020 return.
Example: Don and Shirley, whose AGI is less than $150,000, are newlyweds with no children and filed a joint return in 2019. They receive an advance economic impact payment of $2,400. In 2020, they have a baby, and when their credit is determined on the 2020 return, it is $2,900 ($1,200 + $1,200 + $500). Since they only received $2,400 as an advance payment, they will be entitled to a $500 refundable credit on their 2020 return. The credit will first be used to reduce their tax, and then any excess credit will be refunded.
As you can see, it is important for you to keep Notice 1444 – Your Economic Impact Payment, with your tax records, since it documents the payment you actually received. You should keep this notice filed with all your other important tax records, including W-2s from employers, 1099s from banks and other payers, other income documents, and records to support tax deductions.
If you have any questions regarding your economic impact payment, please call.