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Recovery Rebate Credit – Amount, Eligibility and How to Claim It?

Written by The Anand Market

Updated on:

The IRS has issued all first, second and third Economic Impact Payments. Most eligible people received stimulus money and cannot apply for the recovery rebate credit.

Recovery Rebate Credit

All first, second and third Economic Impact Payments were made by the IRS. The majority of qualified individuals have already received their stimulus payments and are not qualified to apply for a Recovery Rebate Credit.

People who did not receive their full stimulus payment or received a partial payment may be able to claim a recovery rebate credit on their 2024 federal tax return.

  • Advance payments of the 2020 Recovery Rebate Credit were made in the first and second rounds of Economic Impact Payments, which were submitted with a 2020 tax return. 2020 and early 2021 saw their release.
  • The 2021 Recovery Rebate Credit advance payments, which were claimed on a 2021 tax return, included the increased payments from the third wave of Economic Impact Payments. It was released in March 2021 and remained in circulation until December 2021.

For the 2020 and 2021 tax years, individuals should check the details below to see if they are eligible to claim a Recovery Rebate Credit.

  • NJ ANCHOR Discount
  • 2024 stimulus check
  • Payment dates for Alberta Works
  • American Rescue Plan stimulus checks

Recovery Rebate Credit Amount

You could have received COVID-19 stimulus payments, the first and second Economic Impact Payment (EIP), or both. Your adjusted gross income (AGI) and tax filing status determined the amounts of these:

  • The first stimulus payment is $1,200 or $2,400 plus $500 for each dependent.
  • The second stimulus payment is $600 or $1,200 plus $600 for each dependent.
  • The third stimulus payment is $1,400 or $2,800 plus $1,400 for each dependent.
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Your most recent 2018-2019 or 2020 tax return was used to calculate these payments. Additionally, the first EIP gave $500 to each eligible child, the second $600, and the third $1,400. The fourth stimulus payment did not materialize.

recovery rebate credit

How do I claim the Recovery Rebate Credit?

You must submit a U.S. tax return for the year in which the Economic Impact Payment was issued to be eligible for the Recovery Rebate Credit.

For example, you will need to submit a 2020 tax return if you want to claim one or both payments made in 2020. (Even if the filing was not otherwise required.) This also applies to the third stimulus payment which will be disbursed in 2021.

To claim the Recovery Rebate Credit, use line 30 of Form 1040 or Form 1040-SR when filing your taxes. (The instructions on each form provide information on how to calculate credit.) Simply submit your tax return as usual after calculating your credit and completing it.

Recovery Rebate Credit Eligibility

The eligibility requirements for the stimulus rebate credit are quite similar to those for the third wave of stimulus payments. The main difference is that data from your 2021 tax return is used to determine your eligibility for the Recovery Rebate Credit, while data from your 2019 or 2020 tax return is normally used to determine your eligibility for the stimulus check.

Therefore, you might be eligible for the stimulus payment, but not the credit, and the reverse is also true. For the most part, the following will qualify you for the Recovery Rebate Credit during 2021, to be eligible for a tax refund in 2021 you must meet the following criteria:

  • be a citizen or permanent resident of the United States; not be listed as a dependent for someone else’s return;
  • and have a Social Security number (SSN) valid for employment and issued before your return due date (including extensions).
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Who will receive a recovery rebate credit?

Most Americans got the full 2021 stimulus rebate credit as a third stimulus check. Deducting the stimulus money from their stimulus rebate credit will put it at zero. No worksheet is needed to calculate the credit if you got a full third stimulus check.

  • Your 2021 tax return has a smaller AGI than your 2019 or 2020 tax return, which was used to determine your third stimulus payment.
  • In 2021, you had a baby;
  • You share custody, your ex-spouse registered the child as a dependent for 2020, and you did so for 2021;
  • You got married in 2021 (especially if your spouses had significant salary gaps);
  • You can rely on someone’s tax return for 2019 or 2020 (whichever was used to generate your third stimulus payment), but not for 2021;
  • you receive Social Security or veterans benefits, you have not filed a tax return for 2019 or 2020, and you are caring for a dependent child, but the IRS has not collected information on children with the SSA or VA;
  • By the due date of your 2021 tax return (including requested extensions), you obtain an SSN;
  • Your third stimulus check from the IRS was less than you were entitled to; Or
  • You haven’t received any third-round stimulus checks from the IRS.

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