Recovery Rebate Credit
The Coronavirus has affected many of our lives during 2020. Many Americans have been concerned for both their health and financial situation. As the US government has given orders to prevent the spread of the virus, businesses have been forced to halt operations and individuals were obligated to follow stay-at-home orders. The US government provided various stimulus packages to help the American people.
Although the stimulus package was developed, many individuals did not receive any or all the Economic Impact Payment (“stimulus”). In response, the IRS developed a tax credit known as the Recovery Rebate Credit. The credit can be claimed on the 2020 Individual Tax Return.
Pursuant to the IRS News Release the Recovery Rebate Credit cannot be claimed if any of the following apply:
- You received $1,200 plus $500 for each qualifying child you had in 2020; or
- You’re filing a joint return for 2020 and, together, you and your spouse received $2,400 plus $500 for each qualifying child you had in 2020.
The Recovery Rebate Credit can be claimed if:
- A. All the following apply:
- You were a U.S. citizen or U.S. resident alien in 2020;
- Are not a dependent of another taxpayer for tax year 2020; and
- Have a social security number valid for employment that is issued before the due date of your 2020 tax return (including extensions).
- B. Any of the following apply:
- You are eligible but were not issued an stimulus payment; or
- The stimulus payment was less than $1,200 ($2,400 if married filing a joint return) plus $500 for each qualifying child you had in 2020.
The Recovery Rebate Credit begins to phase out if your adjusted gross income for 2020 exceeds $150,000 if you are married filing a joint return, $112,500 if you are using the head of household filing status, or $75,000 if you are using any other filing status.
In summary, the Coronavirus has impacted many lives on a global scale. Fortunately, the United States Congress has stepped in to provide tax relief to the American people. This relief is referred to as the Recovery Rebate Credit. It will be available to those who unjustly did not receive the accurate amount of their stimulus payment.
If you live in New Lenox, Mokena, Frankfort, or the Orland Park area and have questions about your stimulus payment, please call Barbee Tax at (708) 405-2112.