{"id":2392,"date":"2023-02-01T00:01:00","date_gmt":"2023-02-01T00:01:00","guid":{"rendered":"https:\/\/taxreliefprofessional.com\/?p=2392"},"modified":"2023-09-27T00:06:26","modified_gmt":"2023-09-27T00:06:26","slug":"what-consumers-need-to-know-about-the-recovery-rebate-credit","status":"publish","type":"post","link":"https:\/\/taxreliefprofessional.com\/personal-back-taxes-tax-debt\/what-consumers-need-to-know-about-the-recovery-rebate-credit","title":{"rendered":"What Consumers Need to Know About the Recovery Rebate Credit"},"content":{"rendered":"\n<h6 class=\"wp-block-heading\">If you&#8217;re unfamiliar with the <a href=\"https:\/\/taxreliefprofessional.com\/tax-settlement\">recovery rebate<\/a> credit program, keep reading. Here is everything you need to know about this rebate program.<\/h6>\n\n\n\n<p>The 2023 tax deadline is Tuesday, April 18. As individuals and businesses alike prepare to file their appropriate forms, it&#8217;s important to know which ones apply to you. You should also understand the various types of credits you may be eligible for.&nbsp;<\/p>\n\n\n\n<p>The Recovery Rebate Credit is one of those credits.&nbsp;<\/p>\n\n\n\n<p>Taxpayers who&nbsp;did not receive&nbsp;one or more of their&nbsp;Economic Impact Payments or received less than the full amount they were due could claim the Recovery Rebate Credit on their 2020 or 2021 federal tax return.<\/p>\n\n\n\n<p>How does this credit work and does it apply to you? More importantly, is it still in effect and how could it influence your 2022 tax return? Today, we&#8217;re sharing all of the answers you need to know.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Understanding&nbsp;Economic Impact Payments<\/h2>\n\n\n\n<p>What is the Recovery Rebate Credit? To understand how it works, we need to start by explaining what Economic Impact Payments entail.<\/p>\n\n\n\n<p>These payments were issued under the&nbsp;Coronavirus Aid, Relief, and Economic Security (CARES) Act. Passed on March 25, 2020, the&nbsp;<a href=\"https:\/\/home.treasury.gov\/policy-issues\/coronavirus\/about-the-cares-act\">CARES Act<\/a>&nbsp;was designed to provide prompt and&nbsp;direct economic assistance for American employees, families, small businesses, and industries affected by the COVID-19 pandemic.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Three Rounds of Payments<\/h3>\n\n\n\n<p>Beginning in March 2020, the CARES Act&nbsp;provided financial assistance to those who qualified for support.&nbsp;<strong>Round 1<\/strong>&nbsp;of the Economic Impact Payments equaled $1,200 for each eligible&nbsp;adult and $500 per qualifying child under the age of 17. Payments were lower for individuals with an adjusted gross income (AGI) that exceeded $75,000, or $150,000 for married couples filing a joint federal return.<\/p>\n\n\n\n<p>In all, the payments provided a family of four with up to&nbsp;$3,400 of direct financial relief. Soon thereafter, more COVID-19 legislation followed and more rounds of payments followed. Below is a quick synopsis of the&nbsp;new rounds that occurred:<\/p>\n\n\n\n<ul>\n<li><strong>Round 2: Tax Relief Act of 2020 (December 2020):<\/strong>&nbsp;Paid&nbsp;up to $600 per adult for individuals and up to $600 for each qualifying child under the age of 17<\/li>\n\n\n\n<li><strong>Round 3: American Rescue Plan Act of 2021 (March 2021):&nbsp;<\/strong>Paid &nbsp;up to $1,400 for individuals ($2,800 for joint returns), and $1,400 each for dependents (including adults)<\/li>\n<\/ul>\n\n\n\n<p>Round 3 also included an additional &#8220;plus up&#8221; payment. The IRS based this payment on specific information received after making the initial payments to the eligible party.&nbsp;&nbsp;<\/p>\n\n\n\n<p>In all, there were three total rounds of Economic Impact Payments. The third and final round (American Rescue Plan Act of 2021) was required to be issued by December 31, 2021. There have not been any stimulus checks sent since that date.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is the Recovery Rebate Credit?<\/h2>\n\n\n\n<p>The IRS set up the Recovery Rebate Credit to support individuals and businesses that either didn&#8217;t qualify to&nbsp;receive Economic Impact Payments or received only a partial amount.&nbsp;<\/p>\n\n\n\n<p>Note that the number of individuals who qualified under this category was low. Most people who were eligible for a stimulus payment&nbsp;<em>did<\/em>&nbsp;receive theirs.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Those who did qualify for the credit must have applied for it on their 2020 or 2021 federal tax return.&nbsp;Why was this the case?<\/p>\n\n\n\n<p>In essence, all three rounds of the Economic Impact Payments were actually advance payments of the Recovery Rebate Credit in question. Here&#8217;s how the timeline worked:<\/p>\n\n\n\n<ul>\n<li>The first round of payment: Early payment of the 2020 Recovery Rebate Credit, claimed on a 2020 tax return<\/li>\n\n\n\n<li>The second round of payment:&nbsp;Early payment of the 2020 Recovery Rebate Credit, claimed on a 2020 tax return<\/li>\n\n\n\n<li>The third round of payment: Early payment of the 2021 Recovery Rebate Credit, claimed on a 2021 tax return<\/li>\n<\/ul>\n\n\n\n<p>Individuals who hoped to file for a Recovery Rebate Credit were required to understand those timelines. Once they could pinpoint exactly&nbsp;<em>which<\/em>&nbsp;Economic Impact Payment (first, second, or third round) was missing, they would know whether they needed to file a 2020 or 2021 tax return to claim their Recovery Rebate Credit.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Checking Eligibility<\/h3>\n\n\n\n<p>How would someone&nbsp;know how much of a Recovery Rebate Credit they were eligible to receive? First, they would need to gather a few pieces of data, including:&nbsp;<\/p>\n\n\n\n<ul>\n<li>The tax year of the Economic Impact Payments they received<\/li>\n\n\n\n<li>The total amount of the Economic Impact Payments they received&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>From there, they could enter the amounts into their tax prep software, or share them with their&nbsp;<a href=\"https:\/\/taxreliefprofessional.com\/professionals\">tax professional<\/a>. The IRS also designed Form 1040: Recovery Rebate Credit for the purpose of this calculation.&nbsp;&nbsp;<\/p>\n\n\n\n<p>If individuals weren&#8217;t sure&nbsp;<em>how&nbsp;<\/em>much they received in Economic Impact Payments, they could look in two different places. These included:<\/p>\n\n\n\n<ul>\n<li>Their IRS online account<\/li>\n\n\n\n<li>The IRS notices they received with each payment<\/li>\n\n\n\n<li>IRS Letter 6475: Sent through March 2022 to confirm the amount of the third payment<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Claiming the 2021 Recovery Rebate Credit<\/h2>\n\n\n\n<p>Eligible individuals who received the full amount of the Economic Impact Payment in 2021 did not need to include information about that payment when filing their 2021 federal tax return.&nbsp;<\/p>\n\n\n\n<p>If you didn&#8217;t qualify for this payment&nbsp;<em>or<\/em>&nbsp;you did not get the full amount you deserved, you could have claimed the 2021 Recovery Rebate Credit on your 2021 tax return. Note that even if you don&#8217;t typically file a return, you were required to do so to claim this credit. Depending on how much you owed the government, the credit you received would work one of two ways:<\/p>\n\n\n\n<ul>\n<li>Lower the amount of any tax you owed in 2021<\/li>\n\n\n\n<li>Increase the amount you received in your tax refund<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Will There Be a Recovery Rebate Credit on 2022 Tax Returns?<\/h2>\n\n\n\n<p>The short answer to this question is&nbsp;<em>no<\/em>. There were not any Economic Impact Payments issued in 2022. Thus, there is no way for anyone to qualify for a Recovery Rebate Credit on their 2022 federal tax return.&nbsp;<\/p>\n\n\n\n<p>In fact, as most pandemic relief measures have now been allowed to expire, experts are anticipating that tax refunds will be&nbsp;<a href=\"https:\/\/thehill.com\/policy\/finance\/3828849-why-the-irs-says-to-expect-smaller-tax-refunds-this-year\/\">significantly smaller<\/a>&nbsp;this year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Find the Tax Relief You Need<\/h2>\n\n\n\n<p>Whether you qualified for the Recovery Rebate Credit in previous years or not, you may still find yourself falling behind on your tax payments. Staying up-to-date on IRS requirements can be a burden for many, but you don&#8217;t have to do it alone.&nbsp;<\/p>\n\n\n\n<p>At Tax Relief Professional, we&#8217;re here to help you work through your issues and reach a&nbsp;tax relief agreement with the IRS. To learn more about the services we can provide,&nbsp;fill out our&nbsp;<a href=\"https:\/\/taxreliefprofessional.com\/contact\">contact form<\/a>&nbsp;or call us at (877) 469-1651!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&#8217;re unfamiliar with the recovery rebate credit program, keep reading. Here is everything you need to know about this rebate program. The 2023 tax deadline is Tuesday, April 18. As individuals and businesses alike prepare to file their appropriate forms, it&#8217;s important to know which ones apply to you. You should also understand the [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":2393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[15],"tags":[58,27,17],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Consumers Need to Know About the Recovery Rebate Credit - Tax Relief Professional<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/taxreliefprofessional.com\/personal-back-taxes-tax-debt\/what-consumers-need-to-know-about-the-recovery-rebate-credit\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Consumers Need to Know About the Recovery Rebate Credit - Tax Relief Professional\" \/>\n<meta property=\"og:description\" content=\"If you&#8217;re unfamiliar with the recovery rebate credit program, keep reading. Here is everything you need to know about this rebate program. The 2023 tax deadline is Tuesday, April 18. As individuals and businesses alike prepare to file their appropriate forms, it&#8217;s important to know which ones apply to you. 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