Recovery Rebate Credit Available For Those Who Didn’t Get Stimulus ChecksPublished:
Eligible Individuals Can Claim the New Federal Tax Credit for Economic Impact Payments (EIPs) on 2020 Form 1040 or 1040-SR
There is a new tax credit designed for people who are eligible for a stimulus check but did not get one or did not receive the full amount they’re qualified for. Those who didn’t receive an Economic Impact Payment (EIP) may be able to claim the Recovery Rebate Credit on their 2020 tax return.
The Recovery Rebate Credit is authorized by the Coronavirus Aid, Relief, and Economic Security Act (a.k.a. the CARES Act) that was signed into law in March 27, 2020.
The CARES Act & Economic Impact Payments (EIPs)
The CARES Act was a $2 trillion stimulus package that provided funding for a variety of programs, including expanded unemployment benefits and small business loan relief. This bill was an attempt to assist Americans who’ve been struggling with the effects of the COVID-19 pandemic and resulting lockdowns.
As part of the CARES Act, stimulus checks called Economic Impact Payments (EIPs) were distributed eligible individuals in the form of a paper check or via Direct Deposit. Qualified individuals could get up to $1,200 each (or up to $2,400 for a married couple filing a joint return).
Most people were automatically qualified or disqualified for a stimulus payment based on their most recent tax return (for either the 2019 or 2018 tax year) that they filed with the IRS. Those who did not have that information on file with the federal government were encouraged to use the IRS Non-Filers: Enter Info Here online tool to see if they’re eligible for an EIP.
For more information, see the COVID-19 Stimulus Package page.
COVID-19 Relief: Recovery Rebate Credit
The Recovery Rebate Credit is designed for any eligible individual who did not get the full amount of their Economic Impact Payment (a.k.a. stimulus check). This tax credit can be claimed on your Form 1040 or Form 1040-SR for the 2020 tax year.
Similar to other federal tax credits, the Recovery Rebate Credit will either lower the amount of tax you owe or it will increase the amount of your tax refund. However, if you already received a Coronavirus stimulus payment for $1,200 (or $2,400 if married filing jointly) plus $500 for each qualifying child you had in 2020, then you should not try to claim the Recovery Rebate Credit on your income tax return (Form 1040 or Form 1040-SR) because you have already received the maximum amount.
Essentially, the IRS considers the Economic Impact Payment to be an advance payment of the Recovery Rebate Credit. If you received the maximum recovery rebate amount, you will not be eligible to claim the Recovery Rebate Credit on your 2020 return.
Qualifying for the Recovery Rebate Credit
Eligibility for the Recovery Rebate Credit is based on your 2020 tax return information. In general, you qualify to claim this tax credit if all of the following apply:
- You were a U.S. citizen or U.S. resident alien in 2020
- You are not a dependent of another taxpayer for tax year 2020, and
- You have a Social Security Number valid for employment that is issued before the due date of your 2020 tax return (including extensions)
You can claim the Recovery Rebate Credit for any amount that is more than the Economic Impact Payment you received in 2020 by completing Line 30 on your 2020 Tax Form 1040 or 1040-SR.
You may be eligible to claim the Recover Rebate Credit if either of the following apply:
- You are eligible for an Economic Impact Payment but were not issued one
- Your Economic Impact Payment was less than $1,200 for a single filer or $2,400 if married filing a joint return (plus $500 for each qualifying child you had) in 2020
You do not need to provide information about the Recovery Rebate Credit on your 2020 income tax return if either of the following apply:
- You received $1,200 (plus $500 for each qualifying child you had) in 2020
- You are married filing a joint tax return for 2020 and, together, you and your spouse received $2,400 (plus $500 for each qualifying child you had) in 2020
If you qualify for this credit, the amount of your Recovery Rebate Credit will be based on the information on your 2020 tax return when you file it in 2021.
Recovery Rebate Credit Worksheet: Form 1040 & 1040-SR Instructions
Eligible individuals can claim the Recovery Rebate Credit on their 2020 income tax return (Form 1040 or Form 1040-SR). The 2020 Instructions for Form 1040 and Form 1040-SR will include a worksheet that you can use to help figure the amount of the tax credit that you qualify for.
According to the IRS, “Because the Economic Impact Payment you received in 2020 was an advance of the recovery rebate, the worksheet provides you a Recovery Rebate Credit to the extent your recovery rebate amount is more than your Economic Impact Payment.”