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Recovery Rebate Credit

Updated: Mar 11, 2021

Didn’t receive the Economic Impact Payments or received payments less than the full amount? You could qualify for the Recovery Rebate Credit on your 2020 tax return.

The Recovery Rebate Credit was authorized as part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act. Many taxpayers have already received advances of this credit via the Economic Impact Payments, more commonly referred to as stimulus checks. These payments were sent out based on either your 2018 or 2019 tax year information. The Recovery Rebate Credit, however, is based on your 2020 tax information.

There are many changes that may have occurred during the year that may change your eligibility from that of 2019, including, but not limited to:

  • A reduction in your adjusted gross income for 2020

  • The birth of a child during 2020

  • If you were claimed as a dependent in 2019, but not in 2020

Like the stimulus checks, the credit for most people is based on $1,800 for the year, $3,600 for married filing joint couples, and $1,100 for each child under the age 16 that was claimed as a dependent for the year. The credit is reduced by any payments you have already received and can also be limited by your income. The adjusted gross income limit for single filers is $75,000 and $150,000 for married filing joint filers, with a phase out, potentially to $0, for those whose AGI is over the threshold.

Individuals who did not file returns in 2018 or 2019, may not have received any stimulus payments but could qualify. Even if you are not otherwise required to file a 2020 return, you may be eligible to file and claim the credit to get a refund. A return must be filed for 2020 to claim the credit.

For deceased taxpayers, those who passed on 12/31/2019 and prior, were not eligible to receive the stimulus checks, and any funds received are supposed to be returned to the IRS. Those who passed after 1/1/2020, however, are eligible for the Recovery Rebate Credit which can be claimed on either the surviving spouse’s 2020 married filing joint return or on the decedent’s 2020 final tax return.

Consult with your CPA to be sure that you receive the full rebate that you are eligible for.

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