The Recovery Rebate Credit is the new refundable credit authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-related Tax Relief Act. This particular credit is tied to the Economic Impact Payments (EIP). Those who either did not receive their EIPs or did not receive their full EIP amount are eligible to claim the Recovery Rebate Credit.
The IRS provides advice for claiming the Recovery Rebate Credit. According to the IRS, individuals that qualify for the Recovery Rebate Credit must file a 2020 tax return, even if they don’t usually. The Recovery Rebate Credit functions similarly to an EIP, but its eligibility and amount is based on the individual’s 2020 tax return information. As a result, individuals who were thought not to be eligible for either or both EIPs may be eligible for the Recovery Rebate Credit. The individuals claiming the Recovery Rebate Credit will need to know the amount of their EIPs. The Recovery Rebate Credit will be included in any tax refund.
If you want more information on claiming the Recovery Rebate Credit for your 2020 tax return, please contact Lakeesha Browne, CPA.
“Tax Time Guide: Didn’t get Economic Impact Payments? Check eligibility for Recovery Rebate Credit.” IRS, 2 Mar. 2021, https://www.irs.gov/newsroom/tax-time-guide-didnt-get-economic-impact-payments-check-eligibility-for-recovery-rebate-credit
Accessed 4 Mar. 2021.