The third round of stimulus checks is going out, and the IRS has already sent most of the payments. However, if you are still awaiting your missing coronavirus stimulus checks from the first and second rounds, now is the time to claim them via the Recovery Rebate Credit.
Coronavirus stimulus check: why claim the credit?
Those who were eligible for coronavirus stimulus checks under the first and second rounds but didn’t get the payments or got less than what they were eligible for must file for the Recovery Rebate Credit with their 2020 tax return to claim their payments.
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Once you file for the Recovery Rebate Credit, the IRS will either send you a larger tax refund or use the credit to adjust your taxes. It is recommended that you sign up for direct deposit to get your refund faster.
When you file for the credit, the agency will first determine your eligibility and then the amount you are eligible for on the basis of your 2020 tax filing. After this, the IRS will deduct any stimulus payments already issued to you.
You will get a notice if the IRS calculates a different amount of credit than what you filed for with the Recovery Rebate Credit.
The difference in the calculated amount could be due to many reasons, such as a calculation error or if you were claimed as a dependent by another taxpayer on their 2020 return. The difference could also be if the child dependent you claimed was 17 or older on Jan. 1, 2020 or if you fail to provide a valid Social Security Number for employment.
Who will benefit most from the Recovery Rebate Credit?
Filing for the Recovery Rebate Credit could prove very beneficial in certain cases. For instance, if you had a baby in 2019 or 2020, then you may be eligible for an additional dependent payment.
Moreover, college students and other young adults who were claimed as a dependent by their parents on their previous year tax return may also be eligible for the credit if they were not claimed as a dependent for 2020.
If your income declined significantly last year, then you will also be able to claim a larger credit. If you never got the stimulus check in the first two rounds because you changed your address, you can also claim the Recovery Rebate Credit.
The IRS is asking taxpayers to properly determine their eligibility for the Recovery Rebate Credit before filing their 2020 tax return. You have ample time to file your federal taxes, as the deadline has been extended to May 17.
“To calculate any credit due, start with the amount of any EIPs [economic income payments] received. Use the RRC Worksheet or tax preparation software. Taxpayers who didn't save or didn't receive an IRS letter or notice can securely access their individual tax information with an IRS online account,” the IRS said in a press release.