The third stimulus is not entered anywhere on a 2020 federal tax return so there is nothing to update.

The IRS sends the third stimulus directly to you - https://www.irs.gov/coronavirus/get-my-payment

To elaborate, the 3-EIP was received but the newborn in 2020 was not reflected since 2020 returns hadn't been filed.  Will the catch-up for the new baby's 3-EIP happen with an updated form or automatically corrected by the IRS when they get the 2020 tax return?

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@vandedean wrote:

To elaborate, the 3-EIP was received but the newborn in 2020 was not reflected since 2020 returns hadn't been filed.  Will the catch-up for the new baby's 3-EIP happen with an updated form or automatically corrected by the IRS when they get the 2020 tax return?

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The IRS may send the stimulus for the child when the 2020 tax return is processed.  Or you will be able to apply for the stimulus on your 2021 tax return similar to the Recovery Rebate Credit on the 2020 tax return.

EIP-3 will work the same way as EIP-1 and EIP-2 but on a one year delay.  So if you don't receive the $1400 stimulus payment for the new born, you'll get the Recovery Credit on Line 30 of Form 1040 next year