March 20, 2024 8:29 am

Last Chance for Recovery Rebate Credit

By Jaclyn Barkow, DBA, EA, CPA

Taxpayers, who have yet to receive their Economic Impact Payments from COVID-19 relief efforts, are running out of time to do so. Originally, the Economic Impact Payments were given as stimulus payments in 2020 and 2021. Those who did not receive the stimulus payments were able to claim the Recovery Rebate Credit on the respective tax returns. Eligible individuals must file a tax return to claim the credit, even in absence of taxable income.

The 2020 Recovery Rebate Credits

The first and second Economic Impact Payments were sent out in 2020. The first payment was $2,400 for married filing joint and $1,200 for all other filing statuses and $500 for each qualifying child. The second payment was $1,200 for married filing joint and $600 for all other filing statuses and $600 for each qualifying child. If income was over $75,000 for single or married filing separately, $112,500 for head of household, and $150,000 for married filing joint or qualifying surviving spouse (in 2020 qualifying surviving spouse was referred to as qualifying widow/widower). The payment was reduced by 5% of the amount by which AGI exceeds the threshold.

When first approved by the government, the payments were sent to taxpayers. If a taxpayer did not receive one or both payments or did not receive the full amount of one or both payments, the credit(s) may be claimed on the 2020 tax return. If a 2020 tax return was not filed, eligible taxpayers may file a 2020 tax return through May 17, 2024. If a 2020 return was filed but did not include one or both credits and payments were not received, a 2020 amendment may be filed an amendment to claim the credit.

The 2021 Recovery Rebate Credit

The third economic income payment was paid out in 2021 and those who did not receive the amount to which they were entitled, could claim a credit on 2021 tax returns. The third payment as $2,800 for married filing joint couples, $1,400 for all other filing statuses and $1,400 for each qualifying dependent. If income was over $75,000 for single or married filing separately, $112,500 for head of household, and $150,000 for married filing joint or qualifying surviving spouse (in 2021 qualifying surviving spouse was referred to as qualifying widow/widower). The payment was reduced for income over these amounts and fully phased out at $80,000 for single or married filing separately, $120,000 for head of household, and $160,000 married filing joint or qualifying surviving spouse.

Deadlines for Claiming

The first two stimulus payments are no longer available after May 17, 2024, which is the final date to submit a 2020 tax return. The credits must be added to a 2020 tax return to claim the credit fi they were not received. Individuals who did not receive the 2021 stimulus payment may claim the 2021 Recovery Rebate Credit on their 2021 tax return through April 15, 2025.

How to Determine Receipt of the Payments

If you are not sure if you received any of the Economic Impact Payments, the IRS has a few tools available to find the amounts if any. With each economic impact payment, the IRS sent notices. The first IRS Notice you would have received is Notice 1444, which shows the amount of the first economic impact payment for 2020. The second notice is Notice 1444-B, which shows the amount of the second economic impact payment for 2020. The third notice, Notice 1444-C, shows the third economic impact payment for 2021. Finally, Letter 6475 was sent in 2022 confirming the amounts taxpayers received for the third economic impact payment for 2021.

Finding each of these letters in your records may be challenging. Luckily, the IRS can help. The Internal Revenue Service now has a helpful portal where taxpayers may set up an account and access any needed records. Use the website https://www.irs.gov/your-account to set up an account. Using ID.me, the identity verification process seems tedious initially, but is needed to help prevent identity theft. Once the account is created, all letters sent by the IRS to the accountholder may be accessed, including those Notice 1444s and Letter 6475. If you think you should have received any of the payments and did not, verify your eligibility and file before those filing deadlines to ensure you get the credits to which you are entitled.

 

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Tax Glossary

Real estate investment trust (REIT)

An entity that invests primarily in real estate and mortgages and passes through income to investors.

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