Missed Stimulus Check Deadline? Don’t Worry, You Can Still Claim it as a Credit. Here is How?

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recovery rebate credit

The good news for all those, who were eligible for an economic impact payment but did not receive any stimulus check payment or received less than what was owed to them under economic impacts payment will be able to claim it as a recovery rebate credit by filing their income tax return for 2020. In effect, these credits will give rise to additional refunds. Given below is the IRS update on such a problem and reassures public that even if the deadline is over, one can claim stimulus amount as recovery rebate credit in Form 1040 04 Fo 1040s

recovery rebate credit
https://www.irs.gov/coronavirus/get-my-payment

IRS opens Get My Payment tool

Starting today 4th January 2021 , IRS announced that “people can check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov.”

1st stimulus check vs 2nd stimulus check amount

Under the first stimulus check payment, all eligible individuals were entitled to a payment or credit of up to $1,200 for individuals or $2,400 for married couples filing jointly. Eligible individuals also receive $500 for each qualifying child. The second stimulus check is fixed at $ 600 per individual and $1200 for a married couple.

Who can claim recovery rebate credit?

If you are a U.S. citizens living abroad or a resident alien who has SSN and fulfill any one of the following conditions :

  • You are eligible but were not issued an Economic Impact Payment, or
  • Your Economic Impact Payment was less than $1,200 ($2,400 if married filing a joint return) plus $500 for each qualifying child you had in 2020

Then you can claim recovery rebate credits .

Who can not claim recovery rebate credits?

Four types of persons are not eligible for claiming recovery rebate credits. These are

  1. If someone received an economic impact payment after death of a relative.
  2. If you are nonresident aliens or resident aliens and you do not have SSN .
  3. In case of filing joint return, one of the spouse do not have SSN .Then that spouse can not receive recovery rebate credits and the eligible spouse with an SSN can receive a payment only if filing separately. Please note that there is an exception to this rule . In case , the joint return is filed by couple with one spouse is an active member of the U.S. armed forces and either of them has a valid-for-work SSN.
  4. Any persons who can be claimed by someone else as a dependent.

How to know if you are eligible to claim recovery rebate credit?

First, try to calculate the amount of economic impacts payments that you are eligible. You can check with the first stimulus payment calculator and a 2nd stimulus payment calculator. Then, refer to IRS Notice 1444 for knowing the payment amount you were issued. Also, check your bank accounts statements to see if any stimulus amounts were directly paid or deposited. If there is a shortfall or you find you did not receive the amount of the economic impact at all despite being eligible, you can claim a recovery rebate credit.

How to claim recovery rebate credit ?

You need to claim in your Form 1040 or Form 1040-SR. As per IRS , they will include a worksheet for working out the credit in the 2020 Instructions for Form 1040 and 1040-SR .

What if one received more of stimulus payment than recovery rebate credit calculated on the 2020 return?

If an eligible individual was entitled to an economic impact payment and received a payment greater than the recovery rebate credit calculated on the 2020 return, he or she still in most cases gets to keep the original payment. The excess does not need to be repaid to the IRS. However, in the case of the death of the taxpayer or a jointly filing spouse before receipt of the payment, or nonresident alien status for 2020, the FAQs direct the payment or portion of it allocable to the decedent or issued to the nonresident alien to be returned or repaid.

Is the stimulus payment amount taxable ?

The stimulus check you received (economic impact payment) is not taxable income to the recipient. If the IRS adjusts a taxpayer’s recovery rebate credit calculation, it will do so as a “math error adjustment.”

By Prashant Thakur

Prashant Thakur is a tax advisor . He has written two books on tax laws of India. He regularly writes on his paid-only website http://taxworry.com. He is learning about the Internal Revenue Code of USA as many of clients and readers are of India origin and also are tax resident of USA . So . solving their tax issues require reference to IRC of USA.