Economic Impact Payments (EIP) were distributed to millions of taxpayers impacted by the coronavirus outbreak. The measure has been a success, but there is a small thing you must make sure to do when you receive your payment: Don’t forget to keep Notice 1444.
What Is Notice 1444?
The IRS mails this notice to each recipient’s last known address a couple of weeks after depositing their payment. Notice 1444 is the form that indicates the amount of the recipient’s Economic Impact Payment. Keeping this notice can be very important, as you will see below.
Why Is It Important to Keep Notice 1444?
It’s important to keep it because if you think the amount of your payment is wrong, you will refer to your Notice 1444 when you file your 2020 tax return to claim additional credits, if you are eligible for them.
Keep your Notice 1444 with other tax records, such as W-2 Forms from employers, 1099 Forms from banks and other income documents. It’s a good practice to keep past returns and all supporting documents for at least three years.
Reasons Why Your EIP May Be Smaller Than Expected
If you already received your EIP and you think the amount is smaller than it should be, it could be a result of the following:
● You haven’t filed your return for 2019, so your Economic Impact Payment is based on past information.
● The qualifying child is under 17 years of age (considering how old they are at the end of the year for the tax return on which the IRS bases the payment amount).
● Your payment was offset by past-due child support payments.
If you believe that none of these reasons apply to you and you think the amount of your EIP is wrong, make sure to keep Notice 1444 so you can claim any credits you are eligible for in your 2020 tax return.
What Are Economic Impact Payments?
Economic Impact Payments are a stimulus rolled out by the IRS and the Treasury Department that offers financial relief to taxpayers impacted by the coronavirus outbreak.
Eligible individuals received up to $1,200, while eligible couples filing jointly received up to $2,400. Furthermore, taxpayers received an additional $500 for every qualifying child in the first round during 2020.
The Internal Revenue Service is processing a second round of economic impact payments. As with the first round of payments under the CARES Act, most recipients will receive these payments by direct deposit. For Social Security and other beneficiaries who received the first round of payments via Direct Express, they will receive this second payment the same way. The second round payment is $600 per individual and for each of their dependents.
Eligible individuals who did not receive an Economic Impact Payment this year – either the first or the second payment – will be able to claim it when they file their 2020 taxes in 2021. The IRS urges taxpayers who didn’t receive a payment this year to review the eligibility criteria when they file their 2020 taxes; many people, including recent college graduates, may be eligible to claim it. People will see the Economic Impact Payments (EIP) referred to as the Recovery Rebate Credit (RRC) on Form 1040 or Form 1040-SR since the EIPs are an advance payment of the RRC.
Get Help From the Experts
The IRS’ response to COVID-19 changes constantly, so it’s important to stay updated. You can check the IRS website or this blog. It’s also a good idea to get advice from an expert who can help you get advantage of the relief initiatives unrolled by the government. At Meadville Tax Service we have the know-how and the drive to assist you so you can file your taxes efficiently, limiting your tax liability while staying compliant with federal tax regulations.