Accidentally Receiving Two Stimulus Checks: What to Do and Potential Consequences
The Importance of Returning an Extra Stimulus Check
If you find yourself in the awkward situation of accidentally receiving two stimulus checks, it is crucial to take appropriate action. This article will guide you through the steps you should follow, including notification, returning the excess payment, tax implications, and future payments.
Notification
Upon discovering the issue, the Internal Revenue Service (IRS) will likely notify you via a letter explaining the situation and instructing you on how to return the extra payment. This notification is often sent to the address associated with your federal tax return.
Returning the Check
The correct procedure is not to cash or deposit the second check. Instead, you should return it to the IRS. Detailed instructions on how to do this can usually be found within the notification letter or on the IRS website. Proper documentation of the return process is essential to avoid any misunderstandings with the IRS.
Tax Implications
Stimulus checks are typically considered advance payments of a tax credit. If you fail to return the extra funds and do not account for them in your tax return, you could face complications such as potential penalties or adjustments to future tax returns. This is in line with the IRS's general tax filing policies.
Future Payments
Returning the excess money may also affect your eligibility for future stimulus payments or credits. The IRS assesses payments based on a variety of factors, and any discrepancy could impact future benefits. It is wise to stay informed about any changes in eligibility criteria and to keep detailed records.
Legal and Ethical Considerations
Failure to return the extra stimulus check could lead to prosecution for fraud. Given the severe nature of financial crimes, it is imperative to adhere to proper procedures and seek assistance from the IRS if necessary.
Global Context: Canada’s Experience
In Canada, the situation is slightly different due to a widespread mistake. Instead of sending extra checks to a few individuals, the government sent extra stimulus payments to every individual. The government has requested the return of these extra payments, and many Canadians have complied. However, even if you kept the extra payment, there is a possibility that your tax assessment for the current year may be adjusted.
For example, a Canadian individual contacted their local tax office and was told that if they had already spent the extra amount, they did not need to worry. Nevertheless, the individual expected their tax return to be slightly lower due to the reassessment process. It is important to note that in Canada, if you owe the government money, they do not impose additional penalties. Instead, you must pay back any underpaid taxes in the following year.
Ultimately, the key takeaway is to always adhere to the guidelines provided by the IRS and your local tax authority. Keeping detailed records and following through with the necessary steps can help avoid unnecessary stress and potential legal issues.