Why amend your return?
By the time President Joe Biden signed the relief bill, which included both the third round of stimulus checks and a tax break on up to $10,200 in unemployment benefits, about 66 million households had already filed their taxes, according to IRS data.
For the first two stimulus checks, the IRS used your most recent tax return to calculate your eligibility. But at that time, your most recent return would have been from 2019.
If your income dropped in 2020 because of the pandemic, you might have only got a partial payment — or missed out on a check entirely.
That’s where the recovery rebate comes in. The rebate allows you to claim any unpaid stimulus money you missed out on over the last year.
But that requires filling out the line for the rebate in the first place. While the IRS will check your work to ensure you’re getting the amount on your refund, it won’t initiate the process for you if you left it blank on your return.
So if you missed out on some stimulus payments and forgot to claim the recovery rebate credit, experts suggest filing an amended return.
What about other tax breaks?
As for other tax credits and exemptions, like the the tax break jobless benefits, filing an amended return could ensure you get an even larger refund this year.
Typically, unemployment benefits are considered taxable income. If you filed your taxes before you found out up to $10,200 was being exempted from that rule for 2020, you would have ended up paying tax on those benefits.
But depending on how much you received last year, along with your income and filing status, you could see a refund of $1,000 to $3,800, according to multiple media reports.
And submitting an amended return could ensure you qualify for other credits, like the Earned Income Tax Credit, which is a refundable credit of up to $6,660.
Then there’s the matter of your 2017 taxes. The IRS has issued a final call for back returns for that year. You have until May 17 to claim your share of $1.3 billion in unclaimed refund money.
For those needing a little boost to help manage their debt or pay for household expenses, these payments will offer some relief.
What to do if you need more cash right now
The IRS has admitted that processing the rebate could cause a slight delay in getting your refund or other payments to you. If you need a little cash infusion right now, you have some options.
- Slash your insurance payments. You may be overpaying for your car insurance by as much as $1,100 a year. If you think you’re being taken for a ride, it's time to shop around for a better deal. And while you’re at it, you could save hundreds every month by comparing rates to find a lower price on homeowners insurance.
- Get a degree in savings. Student loan debt in the U.S. has hit a record $1.7 trillion, according to the Federal Reserve. If you’re one of the 45 million in the country shouldering the cost of higher education, refinancing your student loan could cut down your monthly payments, ultimately saving your thousands of dollars over the life of your loan.
- Refinance your mortgage and slash your payments. When was the last time you refinanced your home loan? If it’s been more than a year, you’re overdue. Rates have been historically low, so refinance your existing mortgage and reap big savings. Some 11.1 million homeowners could save an average $277 per month through refinancing their loan, says the mortgage technology and data provider Black Knight.
- Play the market. Take advantage of the record-breaking highs on the stock market and download a beginner-friendly app that allows you to invest with just your spare change. With a little time, you can turn those pennies into profits.