Economic Impact Payments, commonly referred to as “Stimulus Checks,” are a key part of the CARES ACT legislation passed by Congress to reduce the financial burden of COVID-19 on individuals and their families. In a world full of change, we hope to provide as much assistance as we possibly can to help our community get through these tough times.
As of today, Americans have received two Economic Impact Payments (EIP), also known as “Stimulus Checks.” The first was in the amount of $1,200 for individuals and an extra $500 for each qualifying child under the age of 17. The second was in the amount of $600 for individuals and an extra $600 for each qualifying child under the age of 17. These EIPs are technically considered an advance payment of a new temporary refundable tax credit that eligible taxpayers can claim on their 2020 return filed in 2021. This refundable tax credit is called the Recovery Rebate Credit.
In terms of eligibility, the terms are fairly simple. If you are not dependent on another taxpayer’s return and you have a social security number that is valid for employment, you are eligible to receive this credit. However, the IRS has implemented phaseout limitations. This means that if your total household income reaches the income limit of the credit, your EIP will gradually decrease. Income limits are based on the household income and filing status you claimed on your 2019 tax return. The limits are $150,000, $112,500, and $75,000 for Married Filing Jointly, Head of Household, and all other filing statuses, respectively. If your household income is above these limits, your EIP will be reduced by 5% of the amount by which your household income exceeds the income limitation.
To those eligible Americans who did not receive the full amount or any EIP in general, don’t worry – there is a solution. The government has allowed taxpayers to claim the full amount of their EIP by filing a 2020 tax return with the IRS and claiming the Recovery Rebate Credit.
If you can answer yes to any of the questions below, you may be entitled to extra money in EIP and should see a tax professional as soon as possible.
• Were you eligible to receive the EIP, but did not?
• Did you have income above the limits in 2019 but can now show income below limits?
• Did you have a baby in 2020?
• Did your parents claim you as a dependent in 2019 but no longer claim you?
If you answered yes to any other of the above questions, you may be able to claim the Recovery Rebate Credit on your 2020 tax return. However, if you have received any type of EIP, your tax professional will need to know the exact amount. Notice 1444, which was sent to you from the U.S. government, will have this information.
For more information on EIP, see questions and answer in the Economic Impact Payment information center.
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