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Recovery Rebate Credit - What is it and how is it related to stimulus payments?

 Recovery Rebate Credit - What is it?


If you did not receive the 1st and 2nd stimulus checks, you can actually still receive the payment by claiming the recovery rebate credit (if eligible). The stimulus check was determined by your filing status in 2018 and 2019. The group that was significantly impacted were college students as many of their parents claimed them as a dependent in 2018-2019. 


The IRS added the new recovery rebate credit in the Form 1040 to ensure that those who did not receive their full economic impact aid would still get their payment. If you did the tecice the first or 2nd stimulus payment, you can now claim that on your tax return to increase your refund or reduce the amount you owe 


You can claim the Recovery Rebate Credit if the following applies to you:


  1. U.S Citizen or U.S. resident alien in 2020

  2. Will NOT be claimed as a dependent  

  3. Have a social security number

  4. You were not issued an Economic Impact Payment

  5. If your 1st economic payment was less than $1,200 and $500 for each qualifying child you had in 2020

  6. If your 2nd economic payment was less than $600 and $600 for each qualifying child you had in 2020



Another thing to note is that if your “Adjusted Gross Income” is greater than the 

  • $150,000 for Married Filing Jointly or Qualifying Widow(er)

  • $112,500 if the head of household

  • $75,000 if single or married filing separately


You will need to subtract your income against the numbers above and there will be a 5% deduction from your credit amount. 


EX: You are SINGLE and your gross income was $80,000, you will subtract $80,000 - $75,000, which is $5,000. Multiply $5,000 x 5% = $250. $250 will be deducted from the first and 2nd economic payments. The remainder will be the amount you will receive. 

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