What IRS Economic Impact Payments Were

Economic Impact Payments were one-time cash transfers sent by the IRS to millions of people during the COVID-19 pandemic. The IRS issued three separate rounds of payments between March 2020 and December 2021. The first round sent $1,200 per adult and $500 per child. The second round sent $600 per adult and $500 per child. The third round sent $1,400 per adult and $1,400 per child. These were not loans — recipients did not have to repay them.

The payments came from three different laws passed by Congress: the CARES Act (March 2020), the Consolidated Appropriations Act (December 2020), and the American Rescue Plan (March 2021). Each law set different income thresholds that determined who received the full amount, a reduced amount, or nothing at all. The IRS used tax return information from 2019 or 2020 to calculate payment amounts, which is why some people received less than the maximum or received payments they later had to account for on their tax return.

Key Takeaways

  • The IRS sent three rounds of Economic Impact Payments between March 2020 and December 2021, with payment amounts ranging from $600 to $1,400 per adult depending on the round.
  • Payment amounts were based on income thresholds that varied by filing status, and payments reduced or stopped entirely for higher earners in each round.
  • The IRS determined who received payments using 2019 or 2020 tax return information, which sometimes meant the payment amount did not match a person's actual 2020 income.
  • People who did not receive a payment or received less than they thought they were owed could claim the difference on their tax return as the Recovery Rebate Credit.
  • These payments ended in 2021 and no additional Economic Impact Payments have been issued since then.

Income Limits for Each Payment Round

Each of the three payment rounds had different income thresholds. For the first payment in 2020, the full amount went to single filers with income under $75,000, heads of household under $112,500, and married couples filing jointly under $150,000. Payments reduced gradually for income above those amounts and stopped entirely at $99,000 for single filers, $136,500 for heads of household, and $198,000 for married couples.

The second payment in December 2020 used the same income thresholds as the first. The third payment in 2021 raised the thresholds slightly. Full payments went to single filers under $75,000, heads of household under $112,500, and married couples under $150,000. The payment phase-out ended at $80,000 for single filers, $120,000 for heads of household, and $160,000 for married couples.

The IRS calculated income using either your 2019 tax return or your 2020 tax return, whichever the agency had on file at the time it processed payments. This meant that if your income changed significantly between 2019 and 2020, your payment amount might not have matched your actual current income. People whose 2020 income was lower than what the IRS used to calculate the payment could claim the difference later on their tax return.

How the IRS Sent Payments

The IRS delivered Economic Impact Payments in three ways: direct deposit to a bank account, a paper check mailed to your address on file, or a debit card. Direct deposit was the fastest method — payments arrived within days of the IRS processing them. Paper checks took longer, sometimes several weeks, depending on mail delivery. The debit cards came in plain envelopes and were straightforward to miss; many people thought they were junk mail.

The IRS used banking information from your most recent tax return to send direct deposits. If your bank account information was outdated or incorrect, the payment bounced back to the IRS and was reissued as a check or debit card instead. Some people never received their payment because the IRS did not have a current address on file. The IRS later created a tool on its website where people could check the status of their payment and update their address if needed.

Claiming a Missing or Reduced Payment

If you did not receive an Economic Impact Payment or received less than you thought you were owed, you could claim the difference on your tax return using the Recovery Rebate Credit. This credit was available on your 2020 tax return (for the first two payments) and your 2021 tax return (for all three payments). You had to file a tax return to claim it, even if you normally did not file.

To claim the Recovery Rebate Credit, you filled out Form 1040-SR or Form 1040 and included Schedule 3 (Other Credits). The form asked how much you received in payments and calculated how much you were owed based on your actual income for that year. If the IRS had used outdated income information to calculate your payment, this was where you corrected it. The credit reduced your tax bill or increased your refund by the difference between what you received and what you were owed.

The important date to claim the Recovery Rebate Credit on your 2021 tax return was April 18, 2022. If you missed that important date, you could still file an amended return using Form 1040-X, though the IRS has time limits on how far back you can amend (generally three years from the original due date).

What Happened to Unclaimed Payments

Some Economic Impact Payments were never claimed or received. This happened when the IRS could not locate a person, when a payment was sent to an address that was no longer valid, or when someone died before receiving their payment. The IRS did not automatically return these funds to recipients or issue new payments after a certain date.

If you believe you never received a payment you were owed, you can still claim it on an amended tax return. You will need to calculate what you should have received based on your income for the year the payment was issued, then file Form 1040-X for that tax year. The IRS processes amended returns slowly — typically four to six months — but you will receive the money as a refund or credit to your account once it is approved.

Economic Impact Payments and Your Tax Return

Economic Impact Payments were not taxable income, which means they did not increase the income you reported on your tax return. However, the IRS needed to know how much you received in order to calculate whether you were owed additional money through the Recovery Rebate Credit. When you filed your tax return, you reported the total amount of payments you received during the year, and the IRS compared that to what you were owed based on your actual income.

If you received more in payments than you were owed based on your income, you did not have to repay the extra amount. The payments were structured so that people with higher incomes received less, but no one had to return money they had already received. This is different from other government programs where overpayments must be repaid.

Frequently Asked Questions

Can I still claim an Economic Impact Payment I never received?

Yes. You can file an amended tax return for the year the payment was issued and claim the Recovery Rebate Credit for the amount you were owed. You will need to calculate what you should have received based on your income that year. The IRS will process the amended return and send you the money as a refund or credit.

What if I received a payment but my income was higher that year than the IRS thought?

You do not have to repay it. Economic Impact Payments were structured so that no one had to return money they received, even if their actual income was higher than what the IRS used to calculate the payment. The payment was yours to keep.

Do Economic Impact Payments count as income for other programs like Medicaid or food stamps?

No. Most state and federal benefit programs did not count Economic Impact Payments as income when determining whether you remained may be able to access. However, rules vary by program and state. If you receive means-tested benefits, contact your caseworker to confirm how the payment affected your case.

Will there be more Economic Impact Payments?

No additional Economic Impact Payments have been issued since December 2021. Congress would need to pass a new law to authorize future payments. As of now, no such law has been proposed.