By Olga Kocybik, CPA, AIWC Dusseldorf
Economic Impact Payments (EIP), also known as stimulus payments or recovery rebates, are payments to eligible taxpayers due to the COVID-19 pandemic. There have been two payments issued:
First EIP: eligible taxpayers that filed either 2018 or 2019 returns automatically received their checks of $1,200 per individual plus $500 for each qualifying child around April-June of 2020.
Second EIP: in December 2020, the IRS started delivering the second round of checks to eligible taxpayers. The second payment is $600 per individual and $600 for each qualifying child.
Both payments adhere to the same income thresholds. Tax filers with an adjusted gross income of less than $75,000 ($150,000 for married filing jointly) are eligible for a full amount. For filers with income above those amounts, the payment is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Most of the questions regarding the first EIP and the eligibility criteria are answered on the IRS website here:
https://www.irs.gov/coronavirus/get-my-payment-frequently-asked-questions
Most of the questions regarding the second EIP are addressed on the IRS website here: https://www.irs.gov/coronavirus/second-eip-faqs
Claiming one or both missing EIPs
If the IRS could not process a 2019 return on time (before December 2020) and has not issued a second check prior to December 31, 2020, taxpayers would need to claim the payment in their 2020 return by completing the Recovery Rebate Credit Worksheet found in the instructions to Form 1040.
Those who received only one of the payments, partial amounts or nothing at all will be able to claim the missing payment(s) using the same worksheet.
Taxpayers would be able to claim the recovery rebate credit only if they received less than what they were supposed to get. The recovery rebate credit is figured like the Economic Impact Payments except that the credit eligibility and the credit amount are based on their 2020 tax year information.
Filers who received the full amounts of both EIPs do not need to complete the Recovery Rebate Credit Worksheet or report any stimulus payment information in their returns.
Disclaimer: In applying the provisions of this and any other tax article, it is important to understand the impact of applicable tax laws will vary between individual taxpayers. Please consult your tax adviser to determine how the tax laws discussed may affect your particular US tax situation.
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