Ever since pandemic-related stimulus payments began last spring, the method of allotting them put newly launched young adults at a disadvantage. Those whose parents claimed them as a dependent couldn’t get a stimulus payment of their own. Nor could the parents collect a stimulus check on behalf of any child who is 17 or older.

Because these payments are based on the most recent tax return, which could be 2018 or 2019, people like my son, who became financially independent in 2020, fell through the cracks. There was no way to notify the U.S. Treasury Department of his new tax status. When he tried to use the Get My Payment app on the IRS website, he got the message, without explanation, that the system could not complete his request. Clearly this was an issue that would affect many thousands of other millennials who became financially independent in 2020.

The bottom line: These young adults didn’t get the $1,200-per-person stimulus payment doled out last spring under the so-called CARES (Coronavirus Aid, Relief, and Economic Security) Act, or the second round, for $600, stemming from the Coronavirus Response and Relief Supplemental Appropriations Act, passed at the end of December.

In my capacity as a private citizen, and without revealing that I am a personal finance writer (and a mom), I reported this issue to the Systemic Advocacy Management System at the IRS. “It has come to my attention that….” was how I prefaced my description, since they deal only with situations that affect “more than one taxpayer” (which in this case would be an understatement). Perhaps I was part of a chorus of those who flagged the problem. In any event, the IRS came up with a solution.

Basically, they now provide a channel to get the first two stimulus payments retroactively. To do that, you need to file a 2020 federal tax return indicating that no one claimed you as a dependent that year. This will put you in the IRS system for the first two stimulus payments, totaling $1,800. It will also get you on record for whatever future payment emerges from the next relief package. (President Biden has proposed that it be an additional $1,400 per person, though various lawmakers favor larger or smaller amounts.)

For a generation that’s been financially clobbered by the pandemic and seen dreams put on hold, this is welcome news. As the IRS noted in a January 12 press release, “many people, including recent college graduates, may be eligible for a credit.”

That wording is a bit convoluted, but here’s how to unravel it. The Service is referring to what’s called the Recovery Rebate Credit. Technically, a stimulus check (in tax jargon called an “Economic Impact Payment”) is an advance on that. For the two past payments, the money was available to anyone with an adjusted gross income (the amount on line 11 of the 2020 return) of $75,000 or less ($150,000 for married couples).

For those who haven’t yet received a payment under the two slapdash Covid-19 relief laws, the IRS, which is responsible for implementing the stimulus provisions, will now even the score. But you must file a 2020 return to start the process, even if you otherwise wouldn’t be required to submit one.

If you don’t owe any taxes – for example, because you’ve made estimated payments or had taxes withheld – the stimulus payments that you missed will come in the form of a refund. Otherwise, the $1,800 gets applied to whatever you owe in 2020 taxes, and you’ll get a refund only if there’s anything left after that.

How to figure out what, if anything, you will receive? The Recovery Rebate Credit Worksheet in the Form 1040 and Form 1040-SR instructions can help you determine if you are eligible for the credit, but it’s much easier to rely on whatever software program you use to prepare your 2020 tax return. TurboTax, for example, asks how much you received in stimulus payments last year, and then calculates what you’re owed. You’ll find the answer on line 30 of Form 1040, which it prepares.

The best way to speed the process along is to file electronically. Though the return isn’t due until April 15, tax season officially opened on February 12, so why delay?

Having the refund direct deposited avoids the need to wait for a check. Just enter your bank account information on line 35 of Form 1040. In the past it took about three weeks after a return was e-filed for refunds to show up in bank accounts, according to Intuit, the company that owns TurboTax. They forecast a similar timetable this year. Fingers crossed.

Deborah L. Jacobs, a lawyer and journalist, is the author of Four Seasons in a Day: Travel, Transitions and Letting Go of the Place We Call Home and Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide.


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