Recovery Rebate Credit – Amount, Eligibility and How to Claim it?

The IRS has issued all first, second, and third Economic Impact Payments. Most eligible persons have received stimulus money and can’t claim a Recovery Rebate Credit.

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Recovery Rebate Credit 

All of the first, second, and third Economic Impact Payments have been made by the IRS. The majority of qualified individuals have already received their stimulus payments and are not qualified to apply for a Recovery Rebate Credit.

Individuals who did not get their full stimulus payment or who received a partial payment might be able to claim a Recovery Rebate Credit on their federal tax return for 2024.

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  • The 2020 Recovery Rebate Credit advance payments were made in the first and second rounds of the Economic Impact Payments, which were submitted with a 2020 tax return. 2020 and the beginning of 2021 saw their release.
  • The 2021 Recovery Rebate Credit advance payments, which were claimed on a 2021 tax return, included the plus-up payments of the third wave of Economic Impact Payments. It was released in March 2021 and remained in circulation until December 2021.

For tax years 2020 and 2021, individuals should check the details below to see whether they qualify to claim a Recovery Rebate Credit.

Recovery Rebate Credit Amount

You could have received stimulus payments connected to COVID-19, the first and second Economic Impact Payments (EIP), or both. Your adjusted gross income (AGI) and tax return filing status determined the amounts of these:

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  • The first stimulus payment amounts to either $1,200 or $2,400 plus $500 for each dependent. 
  • The second stimulus payment amounts to either $600 or $1,200 plus $600 for each dependent. 
  • The third stimulus payment amounts to either $1,400 or $2,800 plus $1,400 for each dependent.

Your most recent tax return from 2018–2019 or 2020 was used to calculate these payments. Furthermore, the first EIP gave $500 to each eligible kid, the second $600, and the third $1,400. The fourth stimulus payment did not materialize.

Recovery Rebate Credit

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How do I Claim the Recovery Rebate Credit? 

You have to submit a US tax return for the year that the Economic Impact Payment was issued to be eligible for the Recovery Rebate Credit. 

For instance, you will need to submit a 2020 tax return if you want to claim one or both of the two payments that were made in 2020. (Even if filing wasn’t otherwise necessary.) This also applies to the third stimulus payment that will be disbursed in 2021. 

To claim the Recovery Rebate Credit, utilize Line 30 of Form 1040 or Form 1040-SR when filing your taxes. (The instructions for each form provide information on how to compute the credit.) Just submit your tax return as normal after calculating your credit and finishing it. 

Eligibility for the Recovery Rebate Credit

Recovery rebate credit qualifying requirements are quite similar to those of the third wave of stimulus payments. The main difference is that data from your 2021 tax return is used to determine your eligibility for the recovery rebate credit, while data from your 2019 or 2020 tax return is normally used to determine your eligibility for the stimulus check. 

Therefore, you may be eligible for the stimulus payment, but not the credit, and the converse is also true. For the most part, the following will qualify you for the recovery rebate credit in the year 2021, to be eligible for a tax refund in 2021, you must meet the following criteria: 

  • be a citizen or permanent resident of the United States; not be listed as a dependant on anyone else’s return; 
  • and possess a Social Security number (SSN) that is valid for employment and issued before the due date of your return (including extensions).

Who Will Get a Recovery Rebate Credit?

Most Americans got the entire 2021 recovery rebate credit as a third stimulus check. Deducting stimulus money from their recovery rebate credit will zero it out. No worksheet is needed to compute the credit if you got a full third stimulus check.

  • Your 2021 tax return has a smaller AGI than your 2019 or 2020 tax return, which was utilized to determine your third stimulus payout.
  • In 2021, you had a baby;
  • You share custody, your ex-spouse listed the kid as a dependant for 2020, and you did for 2021;
  • You married in 2021 (particularly if your spouses had large salary gaps);
  • You may be a dependant on someone’s 2019 or 2020 tax return (whichever was used to generate your third stimulus payout), but not 2021;
  • you get Social Security or veterans benefits, didn’t file a 2019 or 2020 tax return, and care for a dependent kid but the IRS didn’t collect child information from the SSA or VA;
  • By the due date of your 2021 tax return (including requested extensions), you get an SSN;
  • Your third stimulus cheque from the IRS was less than you were entitled to; or
  • You received no third-round stimulus cheque from the IRS.

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