What to do if your coronavirus stimulus check is too big or too small

• The IRS has sent out the majority of coronavirus stimulus checks to Americans who qualify.
• The size of your relief payment is dependent on the adjusted gross income (AGI) listed on the latest tax return you filed, either this year's or 2018's.
• The one-time payment is technically an advance tax credit meant to offset your 2020 taxes. It's refundable, so you won't have to pay it back if you get too much.
• If your payment is too small, you will be able to claim the money on next year's tax return.

If you received a stimulus check, you may be wondering whether it's truly free money.

What happens if you got paid too much? Is the money taxable? Nothing and no. It really is no-strings-attached government aid.

The $2.2 trillion economic relief bill passed by Congress, known as the CARES Act, directs the IRS to deliver "recovery rebates" to qualifying Americans. That is, adults who have a Social Security number and filed a tax return in 2018 or 2019 or receive payments from the Social Security Administration or Railroad Retirement Board.

The one-time payment — which the IRS calls an "economic impact payment" — is technically an advanced tax credit meant to offset your 2020 federal income taxes.

A tax credit reduces your tax bill on a dollar-for-dollar basis. It is one of the last steps in calculating your annual tax liability and can be claimed regardless of whether you itemize your deductions. Some tax credits, like the coronavirus recovery rebate, are refundable. That means you'll still get the money even if you don't have enough tax liability to offset.

Ideally, the US government would make the stimulus payments based on 2020 income figures, since millions of people who were otherwise gainfully employed last year are now out of the job due to coronavirus containment measures and could desperately use the cash.

But the IRS has instead used the adjusted gross income (AGI) listed on the most recent tax return you filed, either this year's or 2018's, to determine the size of your payment. Americans who haven't had to file a tax return in recent years but get federal benefits, like Social Security payments for retirement, are getting $1,200 each via the direct deposit or home address provided on their statements.

What to do if your stimulus check is too big or too small

The maximum payment is $1,200 for single filers with an AGI below $75,000 or single parents (heads of household) with an AGI below $112,500. Married couples who file jointly and have an AGI below $150,000 will get a total of $2,400.

Payments will begin to phase out at a rate of $5 for each $100 over the AGI threshold before ceasing at an AGI of $99,000 for single filers, $136,500 for heads of household, and $198,000 for married filers. There's also an additional $500 allotted to parents who have an AGI within the phaseout range for each child under age 16.

These payments are treated differently than your tax refund. Typically, you can have your refund seized if you owe back taxes, but that's not the case here. Even people with tax debt should get a stimulus payment if they're under the income thresholds. The only people who could get their check reduced due to debt are parents with outstanding child support.

Again, because these payments are based on previous income, you might receive more or less money than is intended on a current needs basis. If you lost your job within the last month, for example, but reported an AGI north of $99,000 on your latest tax return, then you wouldn't be eligible for a relief payment. Or maybe you had a baby since filing your last tax return and should be getting that extra $500.

While it won't help you today, the IRS will allow taxpayers to reconcile underpayment on next year's tax return.

"If you should have gotten a check and didn't, or if you should have gotten more than you did because the IRS didn't know something important (like you have a kid), you should get more money" next tax season, writes tax lawyer Kelly Phillips Erb on Forbes.

The opposite may also happen: Someone has a too-high AGI this year, but their 2018 or 2019 income is within the threshold so they receive a payment. There aren't any clawback provisions outlined in the current bill, so you wouldn't be expected to repay any of the money if you wind up getting too much.

However, the IRS is asking people to return checks sent in error

The IRS has confirmed that some economic impact payments were sent by mistake to nonresident aliens, incarcerated people, and deceased taxpayers. It's now asking those recipients, or their family members, to return the money.

To be clear, the IRS hasn't outlined any consequences for not returning a stimulus check it sent by mistake. Most of the 150 million stimulus payments earmarked for Americans have already been delivered. There's a good chance some people who got stimulus checks in error may have already spent the cash.

IRS guidance says you "should" return the money "immediately," but there's no official mandate. Again, the CARES Act has no clawback provision allowing the IRS to take back money it has already disbursed during the coronavirus national emergency.

• Read more on managing your money in this tumultuous time:
• 3 options for people struggling to pay their mortgage during the global health crisis
• 4 reasons to get disability insurance, even if you don't think you need it
• If you've been financially impacted by the coronavirus, you may be able to pause payments on these 8 bills
• How to get a stimulus check from the US government, which could pay up to $1,200 if you qualify
• In response to the coronavirus, credit card issuers like Amex and Capital One are letting customers skip payments without interest and more

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