I’m sure you remember the stimulus checks you received, or do you? There were three rounds of stimulus checks sent out, the first round started in April 2020, and the third round came as late as summer 2021. The first and second payment were considered an advance on your 2020 taxes, so anyone that didn’t receive the full amount of those payments they were entitled to could file a 2020 tax return and claim the Recovery Rebate Credit for any amount they should have received but didn’t.
The third stimulus payment is considered an advance on your 2021 taxes, so anyone that didn’t receive the full amount of the third payment they were entitled to can claim the Recovery Rebate Credit on the 2021 Form 1040. The third payment for anyone eligible for the full amount was $1,400 per taxpayer and eligible dependent.
To determine if you’re eligible for this credit, you must fill out a Recovery Rebate Credit worksheet, which is included in the Form 1040 instructions. There is no need to fill out this worksheet if you received the full third stimulus payment. The stimulus checks were based on information from your 2019 or 2020 tax return, and you may not have received the full payment, but if your situation has changed, the worksheet uses information from your 2021 tax return, and you will receive any amount you’re eligible for in the form of a tax credit, which will be added to your refund, or deducted from the amount you owe.
It’s important to know the amount of the third stimulus payment that you actually received, and correctly report it on your Recovery Rebate Credit worksheet. This amount should have been reported to you by the IRS on Notice 1444-C, which you should have received shortly after you received your payment. The IRS also mailed Letter 6475 in January 2022, which confirms the amount you received. If you don’t have either of these letters, you can also get the necessary information through an IRS online account.
Incorrectly reporting the amount of recovery rebate credit you’re entitled to, or incorrectly reporting the amount you received as a third stimulus payment, will delay processing of your return, which will delay your refund if you’re expecting one.The fastest and easiest way to verify the amount you received is by accessing your IRS account online. I wrote previously about the Advance Child Care Credit that many taxpayers received, and how important it is to properly report the amount of these payments. Both payment types can be verified by accessing your online account. The IRS has taken a lot of criticism for their lack of online self-help access, but their current online information is very useful in determining the amount of these credits you’re eligible for.
Our firm is encouraging all taxpayers to gain access to their online account. The process to verify your identity, and thus access to your account, has proven difficult for some. We have had folks gain access in as little as five minutes, and we have had some that are still trying, but ultimately, once you have access, it will allow us to verify necessary information needed to file a complete and correct tax return. It will reduce errors and should speed up processing of your return and receipt of your anticipated refund.
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At Faw & Associates, we are always available to answer any of your tax or financial planning questions. You can get more information on this or many other topics directly by calling our office at (336) 838-3080. You can also email me at email@example.com any time with your question or concern.