Who qualifies for the rebate credit and stimulus payments?
You qualify for the rebate credit only if the IRS has not granted you a stimulus payment or if you have received a partial payment.
To find out if you’ve missed money, you can contact the IRS, check your IRS online account, or use the IRS’s “Get My Payment” tool.
Three rounds of Pandemic Stimulus Checks were conducted in 2020 and 2021. Here’s a refresher.
1st and 2nd round of stimulus payments
The first two payments were based on your 2018 or 2019 tax information. Individuals qualified for full stimulus payments if their gross adjusted income (AGI), income less certain deductions, was $75,000 or less ($150,000 for married couples). The IRS reduced stimulus payments by $5 for every $100 earned above the income thresholds.
The first full stimulus payment was $1,200 for singles, $2,400 for married couples, and $500 per qualifying dependent. The second full stimulus payment was $600 for singles, $1,200 for married couples, and $600 for each dependent.
If you have earned more than $99,000 ($198,000 for married couples), you will not receive an initial stimulus payment. With the second stimulus check, once your AGI reached $87,000 for individuals and $174,000 for married couples, your payment was reduced to $0.
3rd round of stimulus payments
The third stimulus checks were based on your 2019 or 2020 tax information. Individuals qualified for the full stimulus payment if their AGI was $75,000 or less ($150,000 for married couples). The full payment was $1,400 for singles, $2,800 for married couples, and an additional $1,400 for each dependent.
If you have earned more than the threshold but no more than $80,000 ($160,000 for married couples), you will receive a partial third stimulus payment.
Who can qualify for the Recovery Rebate Credit?
The income requirements for the rebate tax credit are the same as for the stimulus payments. So if you missed a stimulus check or received a partial payment, you may be eligible for extra cash when you file a federal tax return and claim the credit.
Note that if you find that the IRS issued you a stimulus check but it was lost, you should not apply for the rebate credit and instead ask the tax authority to track the payment.
Who is not eligible for the recovery rebate credit?
If you have received full stimulus payments, you are not eligible for additional cash. And you can’t draw on the loan if someone else can claim you as a dependent.
Additionally, only US citizens or “resident aliens” are eligible for the rebate credit. If you are a “nonresident alien” – someone who failed the green card test – you do not qualify for the credit.
You are also not eligible if you do not have a social security number. But if you are married and your spouse has a social security number, there are certain instances where you may still be eligible for the credit even if you are not in the social security system.
How to claim the rebate credit on a tax return
You must submit your rebate worksheet along with your 2020 or 2021 federal tax return, whichever is applicable. When you file your tax return using one of the best tax preparation software on the market, the program will guide you through the worksheet.
“When you file your 2020 or 2021 tax return, you need to report the stimulus checks you received with the rebate credit you can claim,” says Samantha Hawkins, CPA and founder of Hawkins CPA Solutions in Upper Marlboro, Maryland .
The amount of your first stimulus payment can be found on your 1444 Notice sent to you by the IRS. The IRS followed with a 1444-B notice for the second round of stimulus and a 1444-C notice for the third.
If you do not have the notices, you can create an online account with the IRS to verify payments received.
If you received less than the full stimulus payment for any of the rounds, the worksheet will ask you questions about your income. In some cases, you may be eligible for an additional stimulus payment.
You can claim missing or partial first and second round stimulus payments on your 2020 federal tax return only. Any missing or partial third round stimulus payments can only be claimed on your 2021 federal tax return.
If you’re behind on your tax returns, you have until September 30 to file your 2020 taxes without penalty. Taxpayers who received extensions to file their 2021 tax returns must file by October 17.
Your stimulus checks are not taxable
It is important to understand that a stimulus payment is not taxable. The IRS has issued guidance saying you don’t have to include the amount in your gross income or pay taxes on the money.
Still, many people don’t fully understand how stimulus payments affect their taxes.
“The part that I don’t think most people necessarily understand is that the payment is technically an upfront tax credit,” says Hawkins.
The incentive payments were tax prepayments because the IRS gave you money before you filed your tax return. The rebate credit is considered a refundable credit, which means it may reduce the amount of tax you owe or earn you a refund.
One last important point: if you get more money from the IRS than you’re owed, you usually have to pay back the excess amount. But the payback credit works differently. If you received a stimulus payment based on your past tax information but no longer qualify based on your current tax return, you do not have to repay any stimulus money.