Overpaid EIP

Forum|Forum|4 years ago
February 19, 2022
8 replies
44 views

I've decided to track how much EIP#3 was paid out to clients that would not have qualified for the $1400 had the government waited to give as a credit on the 2021.

I've had several single taxpayers that received the $1400 based on 2020 income but do not qualify based on 2021 income.

I have one family that was overpaid $4200. 2020 return was not filed before EIP#3 was issued so parents received based on 2019. One dependent on 2019 was dropped from 2020 return and another dropped from 2021 return - overpaid $2800. The child dropped from 2020 return received $1400 but then 2021 income was actually over threshold - overpaid $1400.

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rbynaker

Level 13

But it's not really overpaid. Congress wrote the rules and the IRS followed them (well, mostly). If the rule was supposed to be "based on only 2021" then there could have been a claw-back (or even a limited claw-back based on AGI like the ACTC mess).

So it sounds like you're just tracking how much you think should have been paid had you been the one to write the tax law.

Rick (with a possibly biased opinion since my $1,400 was based on 2019--but if the rules had been different and I known that ahead of time I would have changed my 2021 Traditional/Roth 401(k) mix accordingly or waited until 2022 to cash out some capital gains.)

dkhAuthor

Level 15

Agreed - technically not overpaid

Agreed - tracking how much I think should have been paid had I been the one to write the tax law.

rbynaker

Level 13

"especially if the truck has MFS written on the side of it"

I see MFJ gets 3 EIP #3 letters. The first Joint letter came in April 2021 and notified them that they had $2,800 coming and to expect that. Two separately-named individual letters came in January 2022 and reiterated that they each got $1,400. No matter how you file, it's clear the IRS knows what you got. There is no divorced spouse going to be able to argue, "He got my money, so I want more."

Sure, but throw in a dependent or two (or five) and see how quickly the math changes.

2020 MFJ w/3 kids = $7,000 EIP split $3,500 TP and $3,500 SP because that's what the law says.

TP files 2021 MFS w/3 kids, gets $5,600 - $3,500 = $2,100 RRC.

SP files 2021 MFS w/0 kids pays back $1,400 - $3,500 = $0 because nobody has to pay anything back.

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