Stimulus Update: Why Some Americans Could See Bigger Checks in the Coming Months

Millions of Americans are in line for bigger payments as the IRS processes returns.

Over the past few years, Americans were entitled to a substantial amount of stimulus money.

The CARES Act was passed under President Donald Trump and provided $1,200 per adult and $500 per eligible dependent. The Trump administration also provided an additional $600 check for most Americans toward the end of Trump's term in office. And under President Biden, the American Rescue Plan Act authorized $1,400 payments for adults and dependents as well as an expanded Child Tax Credit offering additional relief to parents.

Most of this money was deposited long ago into Americans' bank accounts or sent out via check. But there are millions of people who did not receive all of their stimulus money and who filed tax returns in order to claim their payments.

Unfortunately, the IRS has a large backlog of tax returns to process, so many are still waiting for at least some of their funds. And there is a very good chance that those who are waiting will now be in line for some extra money on top of the original amount of their stimulus payments they were due. Here's why.

The IRS owes stimulus payments to Americans with unprocessed returns

Under IRS rules, the agency must process tax returns within 45 days of the time they are filed. If longer than 45 days have passed, the IRS will be required to pay interest to the taxpayer on the refund money they are owed. The interest rate is now 4%, up from 3% previously, because it is tied to the federal funds rate, which was recently increased.

Because of understaffing and COVID-19 related issues, the IRS is very behind on processing tax refunds. In fact, there are around 9.6 million unprocessed tax returns. Many of the taxpayers who submitted these returns are owed large refunds -- in many cases because they claimed unpaid stimulus money when submitting their tax forms.

Although the IRS has not indicated how many of the unprocessed returns are more than 45 days old, the agency did report that a number of the returns they haven't reviewed yet were submitted prior to 2022. It's likely that much of this backlog is beyond the 45-day limit, or will be soon, and every taxpayer who finds their return isn't processed on schedule can expect to get a larger payment once interest charges are tacked on.

The extra money could be worth billions

With so many unprocessed returns, it's likely that taxpayers will receive billions of dollars in extra interest payments on top of the stimulus money they are owed.

In the last seven years alone, the IRS paid close to $14 billion in interest, with $3.3 billion of that amount sent to taxpayers just in 2021. The agency may owe even more this year, as President Trump and President Biden both authorized extensions on tax returns in 2020 and 2021. Although taxpayers were given more time, the deadline for refunds was still set at the original tax deadline so interest could start accruing earlier.

Americans should be aware of this so they can understand what to expect when the IRS finally sends their refunds and they get the stimulus money they are due.