Were You One of the Many Who Did Not Receive Your Stimulus Check(s)?
- Jan 27, 2021
Now is the time: Claim your eligible payment on your 2020 tax return via the Recovery Rebate Credit.
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and the COVID-related Tax Relief Act authorized the Recovery Rebate Credit. This credit is a refundable credit meaning that even if you owe zero taxes, you will still receive this credit as a tax refund.
The vast majority of eligible individuals received this credit in advance via payments from the IRS referred to as the first and second Economic Impact payments (“EIP”) delivered in early 2020 and early 2021.
Before claiming the Recovery Rebate Credit, you must first determine if you are an eligible individual and the amount you are entitled to receive.
Who is an eligible individual?
- U.S. citizen or U.S. resident alien in 2020 who meets certain income requirements.
- Cannot be claimed as a dependent of another taxpayer for the tax year 2020.
- Have a Social Security number valid for employment.
- Your adjusted gross income (AGI) does not exceed --
- $150,000 if filing as married filing joint (MFJ),
- $112,500 if filing as head of household, or
- $75,000 if filing with any other filing status.
The first EIP was $1,200 ($2,400 if MFJ for 2020) plus $500 for each qualifying child in 2020. The second EIP was $600 ($1,200 if MFJ for 2020) plus $600 for each qualifying child in 2020.
To satisfy the requirements of a qualifying child, the same conditions must be met as for tax purposes, with one exception. For tax purposes, the child must be either younger than 19 years old, or be a student younger than 24 years old at the end of the calendar year. In contrast, both EIP payment allotments of $500 and $600, respectively, are for a qualifying child age 16 and younger, thereby excluding children who are age 17 and older.
The following are several ways to determine the amount of your Economic Impact Payments:
- You may have received IRS Notice 1444 and 1444-B indicating these amounts;
- Log in to your account on https://www.irs.gov/payments/view-your-tax-account;
- Go to IRS website at https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-c-calculating-my-economic-impact-payment;
- Instructions for Form 1040 and 1040-SR include a worksheet for the Recovery Rebate Credit.
If you received these advance EIPs, no additional information is required on your 2020 tax returns. Some of these advanced EIP amounts were too high or sent in error to nonresident aliens and deceased taxpayers. For these individuals that received more than they were entitled to, there is no official mandate to return the money and there are no clawback provisions in the CARES Act. However, the IRS has issued guidance on how to return the money.
For eligible individuals who did not receive the Economic Impact Payments in advance or the amounts were incorrect -- the Recovery Rebate Credit is where you will be made whole. In order to claim the credit, you must file Form 1040 or the new Form 1040-SR and indicate the credit amount on the “Recovery Rebate Credit” line.
Don’t miss your opportunity to get your entire stimulus check with the Recovery Rebate Credit on your 2020 tax return.
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Lisa Cappiello is a Partner with over 25 years of tax consulting and compliance services experience and serves high-net-worth individuals, executives, and businesses in finance, real estate, and private equity.
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