What is
the Recovery Rebate Credit?
The Recovery
Rebate Credit is authorized by the Coronavirus Aid, Relief, and
Economic Security (CARES) Act and the COVID-related Tax Relief Act. It is a tax
credit against your 2020 income tax. Generally, this credit will increase the
amount of your tax refund or decrease the amount of the tax you owe.
The
Recovery Rebate Credit was eligible to be paid in two rounds of advance
payments during 2020 and early 2021. These advanced payments of the Recovery
Rebate Credit are referred to as the first and second Economic Impact Payments.
Individuals
who received the full amounts of both Economic Impact Payments do not need to
complete any information about the Recovery Rebate Credit on their 2020 tax
returns. They already received the full amount of the Recovery Rebate Credit as
Economic Impact Payments. You received the full amounts of both Economic Impact
Payments if:
- Your first Economic Impact Payment was $1,200
($2,400 if married filing jointly for 2020) plus $500 for each qualifying child you
had in 2020; and.
- Your second Economic Impact Payment was $600 ($1,200
if married filing jointly for 2020) plus $600 for each qualifying child
you had in 2020.
Who can
claim the Recovery Rebate Credit?
Eligible
individuals who did not receive the full amounts of both Economic Impact
Payments may claim the Recovery Rebate Credit on their 2020 Form 1040 or
1040-SR. To determine whether you are an eligible individual or the amount of
your Recovery Rebate Credit, complete the Recovery Rebate Credit Worksheet in
the Instructions for Form 1040 and Form 1040-SR.
Generally,
you are eligible to claim the Recovery Rebate Credit if you were a U.S. citizen
or U.S. resident alien in 2020, cannot be claimed as 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).
You must file Form 1040 or Form 1040-SR
to claim the Recovery Rebate Credit even if you are normally not required to
file a tax return. Anyone with income of $72,000 or less can
file their Federal tax return electronically for free through the IRS Free File Program.
Free File is a public-private partnership between the IRS and many filing and
tax preparation software providers who provide their brand-name products for
free. The safest and fastest way to get a tax refund is to combine electronic
filing with Direct Deposit.
Taxpayers residing in
American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and the Northern
Mariana Islands
If you
reside in a U.S. territory, don't complete the Recovery Rebate Credit Worksheet
and don't enter an amount on line 30 of Form 1040 or Form 1040-SR. In general,
the tax authorities in American Samoa, Guam, Puerto Rico, the U.S. Virgin
Islands, and the Northern Mariana Islands will provide the Recovery Rebate
Credit to eligible residents. Territory residents should direct questions about
Economic Impact Payments or the 2020 Recovery Rebate Credit to the tax
authorities in the territories where they reside.
Form
1040 and 1040-SR Instructions - Recovery Rebate Credit Worksheet
If
eligible, you can claim the Recovery Rebate Credit when you file your 2020 tax
return (Form 1040 or Form 1040-SR) electronically using tax software or on
paper. The 2020 tax return instructions include a worksheet you can use to
figure the amount of any Recovery Rebate Credit for which you are eligible. The
worksheet requires you to know the amounts of your Economic Impact Payments.
Eligibility for and the amount of the Recovery Rebate
Credit are based on 2020 tax year information while the Economic Impact
Payments were based on 2019 tax year information. For the first Economic Impact Payment, a 2018 return may have been used
if the 2019 was not filed or processed.
Your
Recovery Rebate Credit amount will be phased out if your adjusted gross income
for 2020 exceeds $150,000 if you are married filing a joint return or filing as
a qualifying widow or widower, $112,500 if you are using the head of household
filing status, or $75,000 if you are using any other filing status.
How
do I find the amounts of my Economic Impact Payments?
IRS letters
You
should have received IRS Notice 1444 for the first Economic Impact Payment, and
you should receive Notice 1444-B for the second Economic Impact Payment.
Refer to them when completing your 2020 tax return. If eligible for the
Recovery Rebate Credit, you will use the information from these letters to
determine the amounts to include on the Recovery Rebate Credit Worksheet or in
your tax preparation software to help you calculate your credit amount.
Get the information you
need from your account
Log in
to your Federal tax account information online to view what you may need when
you electronically file your 2020 tax return (Form 1040 or Form 1040-SR). Two
important reasons to have an account now are:
- In the coming weeks, individuals with an account on IRS.gov/account will be able to
view the amounts of the Economic Impact Payments they received.
- Some people will need the amount of their adjusted
gross income from 2019 if they use different software to file their tax
returns for 2020.
Be sure
you have this important information that you'll need to file your tax return
for 2020 by visiting Secure Access now
to prepare and set up your own Federal tax account online.
For
more information about Economic Impact Payments go to:
Economic Impact Payment Information Center
Questions and Answers
about the Second Economic Impact Payment
IRS Statements and Announcements –
include statements about Economic Impact Payments
Recovery Rebate
Credit Frequently Asked Questions
Page Last Reviewed or
Updated: 26-Jan-2021
