There’s more than one reason a second stimulus payment might be smaller than before

Let’s imagine for a moment that Congress is about to approve a second stimulus check as part of the next coronavirus relief bill. In reality, that doesn’t look particularly hopeful for this month, but a second stimulus payment of $1,200 could very well happen in early 2021. When and if another direct payment does get the go-ahead, the fact of the matter is that you might not get as much money in the second payment as you did in the first.

Why’s that? There could be several reasons, ranging from specific adjustments in the stimulus check qualifications (we provide some examples) to changes in your own life situations.

We’ll walk you through what you need to know so you can start to mentally prepare. Keep in mind that you could also get a larger second stimulus check than before and that some people will be disqualified completely. And here’s where the negotiations over the current stimulus bill stand right now. This story updates often.

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Next stimulus checks: What to expect

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This is the first thing you should know

Some lawmakers are advocating for a second stimulus check worth up to $1,200 per adult to make it into the next stimulus bill. Last week, the White House counteroffered a different proposal that would give qualified adults and children $600 apiece, The Washington Post reported.

Right now it isn’t considered likely that a final COVID-19 relief bill will pass with any stimulus check at all. But it if were to pass now or in the future, households would automatically get a smaller check than before. Remember, too, that even if a bill passes with a $1,200 maximum per adult, there may still be reasons you might see less money for your household.

In the meantime, here’s how the new $600 stimulus check proposal could shake out for you and your loved ones. 

If you began a new job or earned more money overall

Your adjusted gross income, or AGI, is a term normally used on the IRS’ yearly tax return to describe your total income, including assets (like stock sales, credits and deductions or an inheritance, for example) that fall outside your usual paycheck. You didn’t get the first stimulus check if your AGI went above a certain income limit, and that would probably be true of any future stimulus payment.

There’s a direct correlation between your tax status and stimulus check, and any change in your AGI could increase or reduce the size of your check.

For instance, if you received the full $1,200 per qualified adult with the first stimulus check because your AGI was under the income limit, but then you got a promotion or a new job that pays more (congratulations), your next check could be smaller. Or you may have maxed out the threshold and no longer qualify. All told, this is a “good” problem to have.

If new changes to stimulus rules would affect you

Since the terms of the second stimulus check aren’t finalized yet — and likely won’t be until the president signs a bill into law — it isn’t clear how they may or may not change. There’s also the way the IRS may interpret the law and act or withhold stimulus money. For example, after the CARES Act was signed in March, the IRS first sent people in prison and jail a stimulus check, then asked for it back and stopped issuing new checks. A recent ruling from a federal judge has started them up again. 

If this law, and others regarding citizenship status in the US, US territories or abroad, were to change, someone who was eligible to receive the first payment could be disqualified for a second check. 

If you have fewer child dependents now than before

Age is an important factor in how much stimulus money a household gets, but maybe not the way you think. Older adults are in many cases entitled to a stimulus check. In the first round of direct payments, households were given an extra $500 for each “child dependent.” This is a legal minor who is 16 years old or younger. 

Interestingly, the IRS’ definition of a child dependent for your taxes (23 or under, and financially reliant on the tax filer) isn’t the same one used for stimulus checks. 

If the rules stay the same (and there’s some indication they may not), any older dependents you claimed for the first check may have aged out of eligibility, which means you could get $500 less.

If you claim your dependents differently, or owe child support

For the most part, you can use any stimulus check you receive as you like. However, one exception spelled out in the CARES Act from March had to do with child support. If you owe child support to your kid’s other parent, you may have some or all of your stimulus check garnished. If you received an extra $500 for the way you and the other parent filed a dependency claim (it’s complicated), and then changed how you filed in your 2019 tax reserve (for example, if the other parent gained full custody), you may not get the extra $500. Here’s more information about child support situations.

If you’ve fallen behind on payments to creditors or private banks

Normally, your stimulus money can’t be garnished to pay rent or federal tax. There are a few exceptions, however, including the child support situation above. If these rules don’t change with the next stimulus bill, then there are two groups — private creditors and banks — who could legitimately seize all or part of your money from the first, and likely a second, check.

If you moved and the IRS doesn’t have your address

If you moved as a result of the COVID-19 pandemic and haven’t filed a change of address form with the USPS or IRS (a good step to take), the agency may not know where to send a paper check or EIP card. If you received your first stimulus delivery through direct deposit, the IRS will likely go that route again. If you changed bank accounts, you may run into a holdup or need to contact the IRS to file a further claim.

If there’s an error — you’ll need to file a claim for a catch-up payment

It happened with the first check and could easily happen with the next. Clerical errors and complex rules might result in your household getting less money in a future second stimulus check than you might be entitled to — for you and your dependents. Or maybe you don’t normally need to file taxes and wind up missing a rare extra step you need to take. Perhaps you moved (see above). 

Whatever the reason, if some issue prevents you from receiving all or part of your stimulus money, you should be able to claim a rebate. The IRS is currently sorting through these stimulus payment omissions now for a wide range of groups and will likely do so again if a second check comes to be.

If someone in your household has died since your last tax filing

(Our condolences.) If your household received a stimulus check that included a spouse or child dependent who died between your last tax filing and the receipt of the second stimulus check, the IRS is likely to send a smaller sum if your tax filing status, deductions, credits or AGI changed. If the person is recently deceased (by the time the next check arrives), the IRS will ask for the payment to be returned.

For more on stimulus, read what President-elect Joe Biden could do if another stimulus bill doesn’t go through by the time he becomes president Jan. 20, and everything you need to know about stimulus checks.