Earlier this year, Congress passed the CARES law. The law offered Americans several forms of economic relief, including provisions for a stimulus check of $ 1,200 for adults and a stimulus check of $ 500 for children under the age of 17. They have also just passed a second minor stimulus round with $ 600 checks.
While most people got their stimulus money earlier this year, some never got their stimulus check. Others received less than due. In either case, tax advisors can “reclaim” these payments by requesting the refund credit when filing their 2020 tax return.
Recovery Rebate Credit is a new 2020 tax credit. It is dollar-for-dollar credit for those who did not receive the correct amount of money from their stimulus check. For example, a couple who filed with no dependents in 2019 likely received a check for $ 2,400 in April. If they had a baby in 2020, they could claim the additional $ 500 through Rebate Recovery Credit.
The Recovery Rebate Credit is likely your last chance to get your missing stimulus money. If you did not receive the check, you will need to claim the credit on your tax return.
We are working with TaxSlayer to show you how easy it is to claim your missing economic stimulus money when filing your tax return. Take a look at TaxSlayer here and get started >>
1. Review the records
It’s hard to miss a check for $ 1,200 in your bank account. However, in case you missed it, check the status of your payment through the IRS website. Click the Get My Payment button on the appropriate IRS page. There the IRS will explain how they sent the stimulus payment to you and what date the money was sent. The amount of money sent is not displayed.
For an official record of the amount sent to you, see Notice 1444. Notice 1444 is a letter from the IRS detailing the amount of money sent to you. Ideally, you should have kept this document with your tax documents. If you haven’t, you may need to research the amount of money sent. Search your bank account details for an unexpected credit. The credit date should match the information provided by the IRS.
If you did not receive Notice 1444, you may not have qualified for a check based on your 2018 or 2019 tax returns. However, you may still be eligible for recovery credit based on your 2020 income.
2. Start filing your taxes
Once you’ve found out if you’ve received a stimulus check, go through the normal process of filing your taxes. If you are using tax return software (e.g. TaxSlayer), you will be asked to enter the amount of money you received as a stimulus check.
Enter the amount of money you received in the software. If you didn’t receive a check, please enter $ 0. Note: This step is for information only. It won’t decrease your refund or increase your taxable income.
Based on the value you entered and your 2020 income, the software will automatically determine if you qualify for a credit.
Because of its importance, the Recovery Rebate Credit is part of the 1040 base form this year. This means that tax software such as TaxSlayer has to ask questions about the amount of stimulus money received. You will Not have to “dig” after the question about your stimulus payments.
Note: Stimulus money is NOT taxable income. Do not enter any stimulus money that you received as income.
If you’d prefer to do your taxes by hand (because you prefer painful boredom), the recovery discount credit can be found on line 30 of Form 1040. You must complete the worksheet on line 30 to determine the amount of credit due.
While Recovery Rebate Credit is an important asset, it is not the only way to save money on your taxes. Look for other credits and deductions that can help you reduce your tax burden.
If you want to maximize your credits and deductions, you can easily file your tax return with TaxSlayer. You have a robust, free filing option for qualified individuals. If you’re in a slightly more complex situation, TaxSlayer’s Classic $ 17 Classic option includes EVERY tax form, income type, credit and deduction – no restrictions. Check out TaxSlayer here >>
3. File your tax return and wait for your check
Once you’re done with your tax return, you can file (or email) your federal return. After the IRS approves your return, you can sit back and watch your refund check.
The incentive money won’t to be split into a separate check. Instead, the amount owed will be included in your tax refund and will arrive using the refund method you choose (direct deposit, mail check, etc.).
For your information, filing your tax return electronically and choosing direct deposit is the fastest way to get your tax refund. Refund checks for early registrants can be done as early as February.
You can use TaxSlayer Free Edition to submit a simple online return and not miss it.
What if my income for 2020 was higher than in previous years?
While unemployment was high in 2020, some people had banner years for income. If you’ve already received your Stimulus Check, you no longer have to worry about paying it back.
However, if you haven’t received a stimulus check and don’t qualify for 2020 based on your income, you’re out of luck. Restoration discount expiry times start at $ 75,000 for individuals, $ 112,500 for heads of household, and $ 150,000 for a couple in 2020. Individuals who have earned an adjusted gross income greater than $ 99,000 ($ 198,000 for couples) are not eligible the discount.
Remember, if your income is higher, your tax burden is likely to be higher. Be sure to use good quality tax software to minimize your tax burden and maximize your tax breaks. Even if the recovery discount credit isn’t meant for you, there are other ways to save it.
We recommend TaxSlayer this year. Take a look at TaxSlayer here and get started >>