Recovery rebate credit là gì
How to Claim the Recovery Rebate Credit on Your 2021 Tax Return
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What is the Recovery Rebate Credit?In the simplest of terms, it is money in your pocket. In more nuanced terms, the Recovery Rebate Credit is a tax credit against your 2020 income tax. Generally, this credit will increase the amount of your tax refund or decrease the amount of the tax you owe. The Recovery Rebate Credit was paid in three rounds of advance payments during 2020 and early 2021 (this is what was known as ‘stimulus payments', in effect, advanced payments of the Recovery Rebate Credit. They are officially referred to as the first, second and third Economic Impact Payments (EIP1, EIP2 and EIP3). You received the full amounts of all Economic Impact Payments if:
Who can claim the Recovery Rebate Credit?Eligible individuals who did not receive the full amounts of their Economic Impact Payments (read: stimulus payments) may claim the Recovery Rebate Credit on their Form 1040. All of the below must apply:
Tax return filing requiredThere is no more non-filer tool. Even if you are not normally required to file a tax return, if you did not receive any of the Economic Impact Payments, you must file Form 1040 or Form 1040-SR to claim the Recovery Rebate Credit. Taxpayers residing in American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and the Northern Mariana IslandsIf you reside in a U.S. territory, don't complete the Recovery Rebate Credit Worksheet and don't enter an amount on line 30 of Form 1040 or Form 1040-SR. In general, the tax authorities in American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and the Northern Mariana Islands will provide the Recovery Rebate Credit to eligible residents. Territory residents should direct questions about Economic Impact Payments or the 2020 Recovery Rebate Credit to the tax authorities in the territories where they reside. How does the recovery rebate work in coordination with previously issued Economic Impact Payments (EIP1 & EIP2)If eligible, you can claim the Recovery Rebate Credit when you file your 2020 tax return (Form 1040 or Form 1040-SR). Your Recovery Rebate Credit amount will depend on your filing status. The amounts will be phased out if your adjusted gross income for 2020 exceeds $150,000 if you are filing MFJ (Married filing jointly) or filing as a qualifying widow or widower, $112,500 if you are filing as head of household (HOH), or $75,000 if you are using any other filing status. If your family composition has changed (you got married, got new children) and you are eligible for the higher amount of Recovery Rebate Credit than the EIP amount sent to you, you will receive an additional Recovery Rebate Credit based on your new family composition. See the table below for what to provide your tax preparer. If you already received Economic Impact Payment based on your income in 2018 or 2019 year but your adjusted gross income in 2020 exceeds the eligibility level shown above, you are not required to pay back the payments previously received. What if I haven't received my third Economic Impact Payment (EIP3) or got less than the full amount?If you didn't qualify for a third Economic Impact Payment or got less than the full amount, you may be eligible to claim the 2021 Recovery Rebate Credit when you file your 2021 tax return. By law, the IRS cannot issue Economic Impact Payments beyond December 31, 2021. If your 2020 return is not fully processed in time to issue your payment by the legislative deadline of December 31, 2021, you may be eligible to claim the 2021 Recovery Rebate Credit. You must file a return to claim the credit, even if you don't usually file a tax return. The credit is based on your 2021 tax year information, so any third Economic Impact Payments you received will reduce the amount of the credit you're eligible for. Your 2021 Recovery Rebate Credit will reduce any tax you owe for 2021 or be included in your tax refund. How do I find the amounts of my Economic Impact Payments?You should have received IRS Notice 1444 for the first Economic Impact Payment, Notice 1444-B for the second Economic Impact Payment and Notice 1444-C for the third Economic Impact Payment. Through March 2022, the IRS will send Letter 6475, Your 2021 Economic Impact Payment(s), to confirm the total amount of the third Economic Impact Payment and any plus-up payments you received for tax year 2021. If you received joint payments with your spouse, the letter shows the total amount of your half of the payment. Each spouse may receive their letter at different times. If you can’t find them - that’s ok. Check your bank statements - it is important you provide your tax preparer with the correct information to ensure that you receive every penny you are eligible for. Please see the table below. How to claim the creditTax filing is always a complex endeavor. Taking into account how to properly file tax returns to incorporate received, partially received, or issued, but not received economic impact payments (EIP 1, EIP2) is even harder. The IRS has many FAQs - but our team at TFX has issued the below guidelines to make sure you get the money you deserve, taking the IRS guidance into account, along with practical guidance from practitioners.
Ines Zemelman, EA Founder of TFX |