Individuals who didn't automatically receive an Economic Impact Payment or claim a Recovery Rebate Credit during the COVID-19 pandemic get a second chance at the money.
Remember Economic Impact Payments?
These funds, also referred to as stimulus payments, were issued during the height of the COVID-19 pandemic. The Internal Revenue Service sent most of the payments directly to eligible recipients, either as direct deposits or paper checks.
Others received Economic Impact Payment (EIPs), which were as much as $0000, when they filed a Recovery Rebate Credit claim on their annual tax return.
The money help millions make it through the coronavirus cutbacks of 2020 and 2021.
But the IRS' EIP distribution missed some people. Many were people who were eligible for the money, but didn't have to file a return. By not filing, or using the IRS' online tools to get their data into the system, missed out on the money.
Now, however, they are getting a second chance at the pandemic relief payments. But time to do so is limited.
Qualifying individuals must file a return and claim the Recovery Rebate Credit (RRC) for the 2020 tax year by May 17, 2024, and for the 2021 tax year by April 15, 2025.
Added cash possibilities: The RRC is one of the best types of tax breaks.
First, it's a tax credit. Whereas a tax deduction reduces your amount of taxable income use to figure what you owe Uncle Sam, a tax credit is a dollar-for-dollar offset against your final tax bill. If, for example, your tax liability is $1,000, a $500 tax credit will cut that bill in half.
Even better, the RRC is a refundable tax credit. If your tax bill is $250, then that $500 tax credit will zero out your bill, and you'll get the remaining $250 as a refund.
The EIPs were issued in three rounds:
- Round 1 went out in March 2020 per the Coronavirus Aid, Relief and Economic Security (CARES) Act. It was worth $1,200 per income tax filer, and 500 per each qualifying child.
- Round 2 was authorized by Consolidated Appropriations Act, 2021 that became law in December 2020. These payments were another $600 per filer, and $600 per child.
- Round 3 was part of the American Rescue Plan Act signed into law in March 2021. It provided for $1,400 per income tax filer, and $1,400 per eligible child.
Who is eligible? Because the various EIPs were created by separate pieces of legislation, there is some variation in who qualifies for the money.
Generally, to claim the 2020 Recovery Rebate Credit, a person must:
- Have been a U.S. citizen or U.S. resident alien in 2020.
- Not have been a dependent of another taxpayer for 2020.
- Have a Social Security number issued before the due date of the tax return that is valid for employment in the United States.
In order to claim a 2021 Recovery Rebate Credit, a person generally must:
- Have been a U.S. citizen or U.S. resident alien in 2021.
- Not have been a dependent of another taxpayer for 2021.
- Have a Social Security number issued by the due date of the tax return, claim a dependent who has a Social Security number issued by the due date of the tax return, or claim a dependent with an Adoption Taxpayer Identification Number.
The IRS also notes that the 2020 RRC can be claimed for someone who died in 2020. The 2020 RRC and 2021 RRC can be claimed for someone who died in 2021 or later.
Again, the deadlines to file a tax return and claim the RRC are —
- May 17, 2024, for the 2020 credit, and
- April 15, 2025, for the 2021 credit.
Those are the latest dates you can file a return to claim the associated RRC. You also can file the prior year Form 1040 and claim the RRC earlier.
Getting more RRC help: If you did not receive an Economic Impact Payment in 2020 or 2021, or you have questions about the payments, IRS.gov has a special online page with more information.
You also can talk with your tax preparer, who can help you file the appropriate returns.
If you can't afford to pay for tax help, check out your nearest Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) program. VITA and TCE volunteers provide free one-on-one tax preparation help nationwide. Most will start offering help early next year as the 2024 filing season begins.
To locate your local site, use the VITA Locator Tool, or call toll-free (800) 906-9887.
You also might find these items of interest:
- 10 reasons to file a tax return even if you don't have to
- Did you miss out on COVID relief payments or Child Tax Credit? File now!
- Recovery Rebate Credit on 2021 tax return could help get missed COVID stimulus money
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