The IRS just announced that it will send out 50,000 stimulus checks next month. The "catch-up" Economic Impact Payment relates to a mistake the IRS made in processing the original stimulus payments. Here's what happened.
Stimulus Checks Withheld by Mistake
The IRS will offset tax refunds for various reasons, including certain outstanding debts. For example, the IRS will reduce a taxpayer's refund if a he or she has outstanding state income tax obligations. In the case of a stimulus check, the CARES Act provided that the IRS would not offset the payment by such obligations, with one notable exception—past due child support.
In the rush to send out stimulus payments, however, the IRS improperly withheld payments from about 50,000 people. For these individuals, the IRS offset their stimulus check for past due child support owed by their spouse. This offset occurred even for those who filed Form 8379 (Injured Spouse Allocation) with their 2019 or 2018 tax returns. This form effectively notifies the IRS not to withhold money from the “injured spouse” just because their husband or wife as an outstanding obligation.
The IRS identified this issue in May. On the Economic Impact Payment Information Center (Question 31), it described the issue as follows:
“The IRS is aware that in some instances a portion of the payment sent to a spouse who filed an injured spouse claim with his or her 2019 tax return (or 2018 tax return if no 2019 tax return has been filed) has been offset by the non-injured spouse’s past-due child support. The IRS is working with the Bureau of Fiscal Service and the U.S. Department of Health and Human Services, Office of Child Support Enforcement, to resolve this issue as quickly as possible.”
At the time, the IRS said it was working to correct the issue, but didn’t provide a timeline for when the payment would go out.
When Do the Catch-Up Stimulus Checks Go Out?
Having now resolved the issue, the IRS states that it will issue the payments in early to mid-September. The payments will be physical checks and will be mailed to those who filed Form 8379 with their 2019 tax returns, or in some cases their 2018 tax returns. Individuals do not need to take any action to receive this payment.
Individuals who didn't file Form 8379 but had their stimulus check reduced for the same reason will also receive a catch-up stimulus check, but it will take some time. According to the IRS,
“These individuals also do not need to take any action and do not need to submit a Form 8379. The IRS does not yet have a timeframe but will automatically issue the portion of the EIP that was applied to the other spouse's debt at a later date.”
Taxpayers can use the IRS Get My Payment tool to check on the status of these payments.