Tax Credit

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Bunnlevel, NC

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October 28, 2023

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IRS revises the **** Recovery Rebate Credit Frequently Asked Questions

FS-2022-26, April 2022

This Fact Sheet revises the frequently asked questions (FAQs) for the 2020 Recovery Rebate Credit Frequently Asked Questions (FAQs).

This update modifies Questions 1, 4, 5, 8 and adds new Questions 9 and 10, Topic E: Receiving the Credit on a 2020 tax return.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so.

More information about reliance is available. These FAQs were announced in IR-2022-82. Recovery Rebate Credit Frequently Asked Questions

Below are frequently asked questions about the Recovery Rebate Credit, separated by topic. Please do not call the IRS.

• Topic A: Claiming the Recovery Rebate Credit if you aren’t required to file a 2020 tax return

• Topic B: Eligibility for claiming a Recovery Rebate Credit on a 2020 tax return

• Topic C: Claiming the 2020 Credit

• Topic D: Calculating the Credit for a 2020 tax return

• Topic E: Receiving the Credit on a 2020 tax return

• Topic F: Finding the First and Second Economic Impact Payment Amounts to Calculate the 2020 Recovery Rebate Credit (updated)

• Topic G: Correcting issues after the 2020 tax return is filed Recovery Rebate Credit — Topic A: Claiming the Recovery Rebate Credit if you aren’t required to file a 2020 tax return

If you didn't get the full first and second Economic Impact Payments, you may be eligible to claim the 2020 Recovery Rebate Credit and need to file a 2020 tax return to claim it. If you did not qualify for the full third Economic Impact Payment, see Questions and Answers About the Third Economic Impact Payment – Topic H: Reconciling on Your 2021 Tax Return. Q A1. I used the Non-Filers: Enter Payment Info Here tool in 2020 and don’t usually file a tax return. How can I claim a 2020 Recovery Rebate Credit? (updated December 10, 2021) A1. If you're eligible you must file a 2020 tax return to claim the 2020 Recovery Rebate Credit, even if you usually don’t file a tax return.

You will need the amount of all first and second Economic Impact Payments to calculate the 2020 Recovery Rebate Credit. You can find the amounts you received in your IRS Online Account. Tax year 2020 returns can be filed electronically only by paid or volunteer tax return preparers. If you prepare a prior year tax return yourself, you must print, sign and mail your return. There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and others who can assist you in filing your return. For more information about these and other return preparers who might be right for you, visit Need someone to prepare your tax return? on IRS.gov/filing .

The safest and fastest way to get a tax refund (which would include your Recovery Rebate Credit) is to use direct deposit.

Q A2. I don’t have to file, but I think I qualify for more than I received as first and second Economic Impact Payments. How can I file for the 2020 Recovery Rebate Credit? (updated December 10, 2021) A2. If you’re eligible, you must file a 2020 tax return to claim the 2020 Recovery Rebate Credit, even if you are not required to file a tax return.

You will need the amounts of the first and second Economic Impact Payments you received. You can find the amounts you received in your IRS Online Account.

Tax year 2020 returns can be filed electronically only by paid or volunteer tax return preparers. If you prepare a prior year tax return yourself, you must print, sign and mail your return. There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and others who can assist you in filing your return. For more information about these and other return preparers who might be right for you, visit Need someone to prepare your tax return? on IRS.gov/filing for details.

The safest and fastest way to get a tax refund (which would include your Recovery Rebate Credit) is with direct deposit. Q A3. What information do I need to provide to claim the 2020 Recovery Rebate Credit? Do I need the amounts of my first and second Economic Impact Payments? (updated December 10, 2021) A3. Yes. To avoid processing delays that slow your refund, you will need the amounts of the first and second Economic Impact Payments you received.

To claim the 2020 Recovery Rebate Credit you will need to:

• Compute the 2020 Recovery Rebate Credit amount using the line 30 worksheet found in 2020 Form 1040 and Form 1040-SR Instructions PDF.

• Enter the computed amount from the worksheet onto line 30, Recovery Rebate Credit, of your 2020 Form 1040 or 2020 Form 1040-SR.

• Do not include the third Economic Impact Payment when calculating your 2020 Recovery Rebate Credit. Reminder: Complete direct deposit information on line 35b-35d or check the box on line 35a and complete Form 8888 if you want to split your refund for deposit into more than one account or buy a U.S. Savings Bond. Direct deposit is the safest and fastest way to receive your refund. If you don't choose direct deposit, a paper check will be mailed to you. See FAQ A6. How can I get a direct deposit if I don't have a bank account? Q A4. Should I include income on the 2020 tax return even if I am not usually required to file? (updated December 10, 2021)

A4. Yes, you may be eligible to receive additional tax credits if you have earned income and include all your income with the information about a spouse or any dependents on your tax return. Q A5. Can I use IRS Free File to file a tax return to claim a 2020 Recovery Rebate Credit? (updated December 10, 2021) A5. Tax year 2020 returns can be filed electronically only by paid or volunteer tax preparers. If you prepare a prior year tax return yourself, you must print, sign and mail your return. There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and others who can assist you in filing your return. For more information about these and other return preparers who might be right for you, visit Need someone to prepare your tax return? Q A6. How can I get a direct deposit if I don’t have a bank account? (updated December 10, 2021) A6. Having your refund sent via direct deposit is the fastest and safest way to receive your money. If you don’t have a bank account, visit the FDIC website or the National Credit Union Association using their Credit Union Locator Tool for information on where to find a bank or credit union that can open an account online and how to choose the right account for you.

If you are a veteran, see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

You may be able to have your refund applied to a prepaid debit card or mobile app. Check with the financial institution to ensure your card can be used and to obtain the routing number and account number, which may be different from the card number.

Note: Any previously issued Economic Impact Payment debit card is not a reloadable card. Q A7. I am not certain of the correct amount of the 2020 Recovery Rebate Credit for which I am eligible. If I provide my best guess, but I am incorrect, what will happen? (updated December 10, 2021) A7. You will need to know the amount of your first and second Economic Impact Payments to calculate the amount of the Recovery Rebate Credit you can claim on a 2020 return. You can use Online Account to look up these amount(s). If a correction is needed, there may be a delay in processing your return while the IRS makes the correction, which will also delay your tax refund. The IRS will send you a notice explaining any change made to your return. See Topic G: Correcting issues after the 2020 tax return is filed for more information. DO NOT file an amended tax return.

Q A8. What will happen if I enter $0 for the credit and that amount is incorrect or I leave line 30 of 2020 Form 1040 or Form 1040-SR blank? (updated December 10, 2021)

A8. The IRS will not calculate and correct your entry if you enter $0 or leave the line blank for the Recovery Rebate Credit. Instead, the IRS will treat your entry of $0 or blank as your decision not to claim the 2020 Recovery Rebate Credit.

See Topic G: Correcting issues after the 2020 tax return is filed for more information. Recovery Rebate Credit — Topic B: Eligibility for claiming a Recovery Rebate Credit on a 2020 tax return

If you didn't get the full first and second Economic Impact Payments, you may be eligible to claim the 2020 Recovery Rebate Credit and need to file a 2020 tax return to claim it. If you did not qualify for the full third Economic Impact Payment see Questions and Answers About the Third Economic Impact Payment – Topic H: Reconciling on Your 2021 Tax Return. Q B1. Eligibility Requirements: What are the eligibility requirements for the credit? (updated December 10, 2021) A1. The eligibility requirements for the 2020 Recovery Rebate Credit claimed on a 2020 tax return are the same as they were for the first and second Economic Impact Payments except that the credit eligibility and the credit amount are based on your 2020 tax year information. The Economic Impact Payments were based on your 2018 or 2019 tax year information.

If you didn't qualify for the first and second Economic Impact Payments or did not receive the full amounts, you may be eligible for the 2020 Recovery Rebate Credit based on your 2020 tax information. If you received the full amount for the first and second Economic Impact Payments, you won't need to include any information about either – or claim a Recovery Rebate Credit - when you file your 2020 tax return. You received the full amount if:

• Your first Economic Impact Payment was $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child; and

• Your second Economic Impact Payment was $600 ($1,200 if married filing jointly) plus $600 for each qualifying child.

If you either didn't receive any first or second Economic Impact Payments or received less than these full amounts, you may be eligible to claim the Recovery Rebate Credit based on your 2020 tax information and must file a 2020 federal tax return to claim the credit.

Generally, if you were a U.S. citizen or U.S. resident alien in 2020, were not a dependent of another taxpayer and have a Social Security number that is valid for employment, you are eligible for the Recovery Rebate Credit. Your credit amount will be reduced by the amount of your first and second Economic Impact Payments. It also is reduced if your adjusted gross income (AGI) is more than:

• $150,000 if married and filing jointly a return or filing as a qualifying widow or widower

• $112,500 if filing as head of household or

• $75,000 if filing as a single or as married filing separately. Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above. You are not eligible for the Recovery Rebate Credit claimed on a 2020 tax return if any of the following applies:

• You may be claimed as a dependent on another taxpayer's 2020 return (for example, a child or student who may be claimed on a parent's return or a dependent parent who may be claimed on an adult child's return).

• You do not have a Social Security number that is valid for employment issued before the due date of your 2020 tax return (including extensions). Some exceptions apply for those who file married filing jointly where only one spouse must have a valid Social Security number to claim the credit.

• You are a nonresident alien.

• You are an estate or trust.

Also, individuals who died prior to January 1, 2020 are not eligible for the Recovery Rebate Credit claimed on a 2020 tax return.

See IRS.gov/rrc or the Recovery Rebate Credit Worksheet available in the 2020 Form 1040 and Form 1040-SR instructions for more information.

Q B2. Not Eligible for Economic Impact Payments: If I wasn't eligible for Economic Impact Payments, am I not eligible for the Recovery Rebate Credit? (updated December 10, 2021) A2. If you were not eligible for either or both of the first and second Economic Impact Payments, you may still be eligible for the 2020 Recovery Rebate Credit claimed on a 2020 tax return since it's based on your 2020 tax return information. The first and second Economic Impact Payments were based on your 2018 or 2019 tax information. Here are reasons why you may qualify for the 2020 Recovery Rebate Credit claimed on a 2020 tax return. Income change: Your adjusted gross income went down in 2020. Qualifying child: You welcomed an eligible child in 2020 who was under the age of 17 at the end of 2020. No longer a dependent: You were no longer eligible to be claimed as a dependent on someone else's tax return in 2020. Social Security number: You received a Social Security number valid for employment before the due date of your 2020 return (including extensions).

Q B3. Change in Eligibility: If I received first and second Economic Impact Payments and, based on my 2020 tax return, I'm no longer eligible, do I need to pay that money back? (updated December 10, 2021) A3. No. If you received a payment based on your 2018 or 2019 tax information, the law doesn't require you to pay back any excess payments based on the information reported on your 2020 tax returns. Q B4. Social Security number (SSN) Requirement: Do I need to have an SSN to claim the credit on a 2020 tax return?

(updated December 10, 2021)

A4. Generally, yes, you must have a Social Security number valid for employment to get the credit. In general, when spouses file a joint return, each spouse must have a Social Security number valid for employment to receive the full amount of the Recovery Rebate Credit.

If, however, at least one of the spouses is a member of the U.S. Armed Forces at any time during the 2020 taxable year, only one spouse needs to have a Social Security number valid for employment to receive the full amount of each Recovery Rebate Credit claimed on a 2020 tax return for both spouses. Under a law enacted in December 2020, a married couple filing a joint return may be eligible for a partial credit when only one spouse has a Social Security number valid for employment. If you and your spouse did not receive one or both first or second Economic Impact Payments because one of you did not have a Social Security number valid for employment, you should complete the Recovery Rebate Credit Worksheet or use tax preparation software to determine if you may claim a Recovery Rebate Credit on your 2020 tax return for the spouse with the Social Security number valid for employment.

If you filed a 2020 tax return and didn't claim the credit on your return but are eligible for it, you must file an amended return to claim the credit. See the 2020 FAQs Recovery Rebate Credit — Topic G: Correcting issues after the 2020 tax return is filed.

Q B5. Social Security number (SSN) Valid for Employment: What is meant by an SSN that is valid for employment?

(updated December 10, 2021)

A5. A valid SSN for the Recovery Rebate Credit claimed on a 2020 tax return is one that is valid for employment in the United States and is issued by the Social Security Administration (SSA) before the due date of your 2020 tax return

(including an extension to October 15, 2021, if you requested it). If the individual was a U.S. citizen when they received the SSN, then it's valid for employment. If "Valid for Work Only with DHS Authorization" is printed on the individual's Social Security card, the individual has the required SSN only as long as the Department of Homeland Security authorization is valid. Q B6. Social Security number (SSN) Spouses Filing Jointly: My spouse has an SSN and I have an ITIN. Are we eligible for the credit claimed on a 2020 tax return? (updated December 10, 2021) A6. Under a law enacted in December 2020, a married couple filing a joint return now may be eligible for a partial credit claimed on a 2020 tax return when only one spouse has a Social Security number valid for employment. If you and your spouse did not receive one or both first or second Economic Impact Payments because one of you did not have a Social Security number valid for employment, you should complete the Recovery Rebate Credit Worksheet or use tax preparation software to determine if you may claim the credit on your 2020 tax return for the spouse with the Social Security number valid for employment. There is an exception if one spouse is a member of the U.S. Armed Forces. See the next question and answer for more details.

If eligible for a Recovery Rebate Credit, you claim it on line 30 of your 2020 tax return. If you filed a 2020 tax return and didn't claim the credit on your return but are eligible for the credit, you must file an amended return to claim the credit. See the 2020 FAQs Recovery Rebate Credit — Topic G: Correcting issues after the 2020 tax return is filed.

Q B7. Social Security number (SSN) Spouses Filing Jointly if one spouse is a member of the military: My spouse has an SSN and I have an ITIN. Are we eligible for the credit claimed on a 2020 tax return? (updated December 10, 2021) A7. If either spouse is a member of the U.S. Armed Forces at any time during the 2020 taxable year, only one spouse needs to have a valid SSN for both spouses to claim the credit when they file a 2020 joint return. If you file separately, the spouse who has an SSN may qualify for the credit but the other spouse without a valid SSN will not qualify.

Q B8. Qualifying Widow or Widower: I filed my 2019 return as a qualifying widow or widower. Am I eligible to claim the 2020 credit? (updated December 10, 2021)

A8: If you filed your 2019 return as a qualifying widow or widower and your 2019 adjusted gross income was more than

$75,000, you may not have received the full amount of the first and second Economic Impact Payments. You should complete the Recovery Rebate Credit Worksheet or use tax preparation software to determine if you may claim the Recovery Rebate Credit on your 2020 tax return.

The fastest way to get your tax refund is to have it direct deposited - contactless and free - into your financial account. You can use a bank account, many prepaid debit cards and several mobile apps for your direct deposit and will need to provide routing and account numbers.

Q B9. Dependents: I didn't receive the Economic Impact Payment because I was claimed as a dependent on someone else's return. Can I claim the 2020 credit if I'm not a dependent in 2020? (updated December 10, 2021) A9. Maybe. If you cannot be claimed as a dependent on someone else's return for the 2020 tax year, you may be eligible to claim the Recovery Rebate Credit on a 2020 tax return if all other eligibility requirements are met. If you're married and didn't receive the full first and second Economic Impact Payments, you should determine your eligibility for the Recovery Rebate Credit when filing your 2020 tax return. You and your spouse can't be claimed as a dependent on someone else's return for the 2020 tax year if you claim the Recovery Rebate Credit on a joint tax return that you and your spouse file together. See Joint Return Test under Dependents in Publication 501, Dependents, Standard Deduction, and Filing Information.

The fastest way to get your tax refund is to have it direct deposited - contactless and free - into your financial account. You will need to provide the routing and account numbers no matter which option you choose - bank accounts, prepaid debit cards or mobile apps.

Q B10. Incarcerated Individuals: Can I claim the credit on a 2020 tax return if I was incarcerated in 2020? (updated December 10, 2021)

A10. Yes, individuals will not be denied the Recovery Rebate Credit claimed on a 2020 tax return solely because they are incarcerated.

Q B11. U.S. Territory Residents: Can I claim the credit on a 2020 tax return if I was a bona fide resident of a U.S. territory in 2020? (updated December 10, 2021)

A11. No, you may not claim the credit from the IRS. Instead, tax authorities in U.S. territories will provide the Recovery Rebate Credit to eligible residents. Individuals who were territory residents in 2020 should direct questions about first and second Economic Impact Payments received or the 2020 Recovery Rebate Credit to the tax authorities in the territories where they reside.

Q B12. Deceased Individuals: Are individuals who died during 2020 eligible for the credit on their Tax Year 2020 return? (updated December 10, 2021)

A12. An individual who died in 2020 or in 2021 and did not receive the full amount of the first or second Economic Impact Payment may be eligible for the 2020 Recovery Rebate Credit if the individual met the eligibility requirements. An individual who died prior to January 1, 2020, does not qualify for the Recovery Rebate Credit. Recovery Rebate Credit — Topic C: Claiming the 2020 Credit If you didn't get the full first and second Economic Impact Payment, you may be eligible to claim the 2020 Recovery Rebate Credit and need to file a 2020 tax return to claim it. If you did not qualify for the full third Economic Impact Payment or got less than the full amount, see Questions and Answers About the Third Economic Impact Payment – Topic H: Reconciling on Your 2021 Tax Return. Q C1. How to claim: How do I claim the Recovery Rebate Credit on a 2020 tax return? (updated December 10, 2021) A1. If you didn’t qualify for the first and second Economic Impact Payments or did not receive the full amounts, you may be eligible for the Recovery Rebate Credit based on your 2020 tax information. You must file a 2020 tax return to claim a Recovery Rebate Credit, even if you don’t usually file a tax return. The Recovery Rebate Credit Worksheet in the 2020 Form 1040 and Form 1040-SR instructions PDF can help determine if you are eligible for the credit.

The fastest way to get your tax refund is to have it direct deposited - contactless and free - into your financial account. You can use a bank account, prepaid debit card or mobile app for your direct deposit and will need to provide routing and account numbers.

Q C2. The IRS hasn’t finished processing my 2019 tax return. Can I file my 2020 tax return to claim a Recovery Rebate Credit if I did not get my full first or second Economic Impact Payments? (updated December 10, 2021) A2. Yes. If you did not receive the full amounts of your first or second Economic Impact Payments and are eligible for the Recovery Rebate Credit, you can file your 2020 tax return to claim the credit. Your Recovery Rebate Credit will reduce the amount of tax you owe for 2020 or, if more than the tax you owe, be included in your 2020 tax refund. Note: If your 2019 tax return has not been processed yet, the IRS won’t send you an Economic Impact Payment since all first and second Economic Impact Payments have been sent out by the IRS. Avoid refund delays; file a complete and accurate tax return. You will need the amounts of any first or second Economic Impact Payments you received to calculate your 2020 Recovery Rebate Credit. Enter the amounts on the Form 1040 2020 Recovery Rebate Credit Worksheet to calculate your credit amount. See 2020 Recovery Rebate Credit FAQs Topic F: Finding the First and Second Economic Impact Payment Amounts to Calculate the 2020 Recovery Rebate Credit. You must file a 2020 tax return to claim the Recovery Rebate Credit, even if you don't usually file a tax return. See the 2020 FAQs Recovery Rebate Credit — Topic A: Claiming the Recovery Rebate Credit if you aren’t required to file a tax return.

Q C3. What is the quickest way to get the 2020 Recovery Rebate Credit? (updated December 10, 2021) A3. You must file a 2020 tax return to claim a Recovery Rebate Credit, even if you don’t usually file a tax return. The Recovery Rebate Credit Worksheet in the 2020 Form 1040 and Form 1040-SR instructions PDF can help determine if you are eligible for the credit.

See the 2020 FAQs Recovery Rebate Credit — Topic A: Claiming the Recovery Rebate Credit if you aren’t required to file a tax return.

Q C4. Where can I get help completing my 2020 tax return for the Recovery Rebate Credit if I can’t do it myself?

(updated December 10, 2021)

A4. If you need help to file your 2020 tax return to claim the Recovery Rebate Credit, there are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys and others who can assist you in filing your return. See Need someone to prepare your tax return? for information on how to choose the right preparer for you.

Recovery Rebate Credit — Topic D: Calculating the Credit for a 2020 tax return If you didn't get the full first and second Economic Impact Payment, you may be eligible to claim the 2020 Recovery Rebate Credit and need to file a 2020 tax return to claim it. If you did not qualify for the full third Economic Impact Payment, see Questions and Answers About the Third Economic Impact Payment – Topic H: Reconciling on Your 2021 Tax Return. Q D1. How do I figure the credit on a 2020 tax return? (updated December 10, 2021) A1. You must file a 2020 tax return to claim a 2020 Recovery Rebate Credit, even if you don't usually file a tax return. See the 2020 Recovery Rebate Credit FAQs — Topic A: Claiming the Recovery Rebate Credit if you aren't required to file a tax return.

To figure the credit amount, you will need to know the amount(s) of any first or second Economic Impact Payments you received. You can find your Economic Impact Payment amounts at IRS.gov/account. You may also refer to Notice 1444, Your Economic Impact Payment, which shows the amount of the first EIP and Notice 1444-B which shows the amount of the second EIP.

Use the Recovery Rebate Credit Worksheet in the 2020 Form 1040 and Form 1040-SR instructions PDF to help determine if you are eligible for the credit.

If your 2020 tax return has been processed and you didn't claim the credit on your return but are eligible for it, you must file an amended return to claim the credit. See the 2020 Recovery Rebate Credit FAQs — Topic G: Correcting issues after the 2020 tax return is filed.

Q D2. Errors: Will the IRS figure the credit for me on my 2020 tax return? What happens if I claim an incorrect amount? (updated December 10, 2021)

A2. If you're eligible for the Recovery Rebate Credit, you'll need to file a 2020 tax return to claim the credit even if you don't usually file a tax return. This credit is claimed on Line 30 of Form 1040 and 1040-SR. To avoid refund delays, you must file a complete and accurate return.

See the 2020 Recovery Rebate Credit FAQs — Topic A: Claiming the Recovery Rebate Credit if you aren't required to file a tax return.

The IRS will not calculate the Recovery Rebate Credit for you but if you make a mistake on the Line 30 amount, we will calculate the correct amount of the Recovery Rebate Credit, correct your tax return and continue processing it. This will

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