If you believe it’s too late to claim one of the stimulus checks issued by the government during the COVID-19 pandemic, you’re in for a surprise. While most people have already received their payments, there are still opportunities for those who, for various reasons, haven’t received the full amount or didn’t get any payment at all. This process can be done through what’s called the Recovery Rebate Credit (RRC).
The economic downturn caused by the pandemic led the administrations of both President Donald Trump and President Joe Biden to issue several rounds of direct payments to help families cope with the financial challenges. Even though many people have received their money, there are still individuals who haven’t claimed what they’re entitled to.
Who is eligible to claim the stimulus check Recovery Rebate Credit?
Anyone who didn’t receive one or more of the stimulus checks or received less than they were supposed to can file for the Recovery Rebate Credit. This credit can be claimed on federal tax returns for either the 2020 or 2021 tax years, depending on which payment round was missed. Keep in mind, though, this only applies if you haven’t received the full amount of your stimulus payments.
According to the IRS, the first and second rounds of stimulus checks were actually advance payments of the 2020 Recovery Rebate Credit, which should have been reflected on your 2020 tax return. On the other hand, the third round of payments, which began in March 2021, was an advance payment of the 2021 Recovery Rebate Credit.
Steps to claim the Recovery Rebate Credit
If you’re missing any of these payments, the process to claim the credit is relatively straightforward. First, you’ll need to know the exact amounts of the Economic Impact Payments you’ve received so far. Having this information is critical to calculate the credit correctly and avoid potential errors on your tax return. If you make a mistake, the IRS might take longer to process your request.
To calculate the Recovery Rebate Credit, you should input the amounts you’ve received into your tax preparation software or use the Recovery Rebate Credit Worksheet included with Form 1040. This step is crucial to ensure that no errors are made, which could delay your refund.
What if I already received the full amount of the stimulus check?
If you’ve already received the full amount of the third Economic Impact Payment, there’s nothing special you need to do when filing your 2021 tax return. However, if you received less than the total or didn’t qualify for the payment initially, you may still be eligible to claim the 2021 Recovery Rebate Credit.
This credit will be based on your financial situation for the 2021 tax year, so if you’re missing part of the payment, it can either be deducted from the taxes you owe or added to your refund. To claim this credit, you’ll need to file a tax return, even if you don’t normally file one.
Documentation needed to claim the credit
To streamline the process, the IRS recommends having Letter 6475 on hand, which details the amounts of the third Economic Impact Payment you received. This letter was sent to taxpayers at the beginning of 2022. If you don’t have it, you can also check your IRS Online Account to verify the payments you’ve received.
It’s important to remember not to include the amounts from the first two stimulus payments on your 2021 return.
If you’re missing any of those earlier payments, you’ll need to claim the 2020 Recovery Rebate Credit on your 2020 tax return instead.
How to file your 2021 tax return
The best way to claim the 2021 Recovery Rebate Credit is by filing your tax return electronically. Not only does this simplify the process of calculating the credit, but it also helps to avoid errors and speeds up the entire process. Additionally, if you’re eligible for a refund, you can have it deposited directly into your bank account or loaded onto a prepaid debit card.
This method is both safe and efficient. All you need to do is provide your bank account number and routing number, and the money will go straight into your account.