The COVID-19 pandemic forced governments to provide support for their citizens, and the Economic Impact Payments were one of the most important supports for Americans living in the country or abroad. Although millions of Americans benefited from this support, some of them didn’t receive the full amount available. If you are one of these people, you can claim your balance with the help of the IRS Recovery Rebate Credit. How? Details are in our coverage.
What Is the Recovery Rebate Credit?
The Economic Impact Payment was the support provided to Americans to cope with the financial burden of the pandemic. It is a series of tax credits that can be claimed on the annual income tax return.
The IRS used the recent tax information of citizens to determine who can benefit from this support and how much balance they can receive with these payments. Considering the scale of the operations, it is pretty natural for the system to have some failures, and a Recovery Rebate Credit was provided for this purpose.
If your financial situation changes after 2024 and beyond, you may receive less than you actually need to receive. These people can use the Recovery Rebate Credit to receive the full amount.
Who Can Claim the Recovery Rebate Credit?
Before you apply to claim the Recovery Rebate Credit, you need to check whether you are eligible for the Economic Impact Payments. If you meet the following conditions and applied for any stimulus payments, you can file for the Recovery Rebate Credit.
A US citizen or foreigner residing in the US
Having a social security number for employment
Not claimed as a dependent by any taxpayer.
- A US citizen or foreigner residing in the US
- Having a social security number for employment
- Not claimed as a dependent by any taxpayer.
Besides these, there is also a regulation that lets you claim the full amount, according to an income threshold. This year’s income threshold was $75,000 for single filers. If your income increased during this period, your claim may be reduced due to this. This doesn’t mean that you cannot claim any balance, but you will not be able to claim the full amount.
In addition to this, those who didn’t receive any Economic Impact Payment can also claim the Recovery Rebate Credit in case their financial situation changed during the period.
How to Claim Your Recovery Rebate Credit?
If you want to claim your Recovery Rebate Credit, then you need to file a tax return for the year when the Economic Impact Payment is offered. Two of them were sent out in 2020, and one of them was sent out in 2021.
If you file a 2020 tax return, you can claim one or both of these payments. In other words, if you file a 2023 and 2024 tax return, you can claim all three payments.
Those who are planning to claim the Recovery Rebate Credit must also file Form 1040 or Form 1040-SR while filing their tax return. Both of these forms have special sections that help you calculate the amount of credit you can claim. Once you are done, all you need to do is file your forms together with the tax returns.
Although these procedures are completely free and you can carry them out on your own, you can also work with a tax professional.