The IRS just announced that it will send out 50,000 stimulus checks next month. The "catch-up" Economic Impact Payment relates to a mistake the IRS made in processing the original stimulus payments. Here's what happened.
The IRS will offset tax refunds for various reasons, including certain outstanding debts. For example, the IRS will reduce a taxpayer's refund if a he or she has outstanding state income tax obligations. In the case of a stimulus check, the CARES Act provided that the IRS would not offset the payment by such obligations, with one notable exception—past due child support.
In the rush to send out stimulus payments, however, the IRS improperly withheld payments from about 50,000 people. For these individuals, the IRS offset their stimulus check for past due child support owed by their spouse. This offset occurred even for those who filed Form 8379 (Injured Spouse Allocation) with their 2019 or 2018 tax returns. This form effectively notifies the IRS not to withhold money from the “injured spouse” just because their husband or wife as an outstanding obligation.