HomePersonal FinanceIRS Updates Guidance on Claiming Missed Economic Impact Payments

IRS Updates Guidance on Claiming Missed Economic Impact Payments

The Recovery Rebate payments are paid in form of the three Economic Impact Payments already paid as authorized by CARES (Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. The first and second Economic Impact Payment was paid in 2020 and early 2021.

The third Economic Impact Payment started in March and will run through till the end of December 2021. For those who missed any of the Covid Stimulus Payments, you can still claim it.

How to claim the Third Economic Impact Payments?

The IRS has released a guideline on its website on how to claim missed COVID 19 Stimulus payments, those who did not qualify, or those who didn’t get their full payments.

For those who didn’t qualify for the third Economic Impact Payment or got less than the full amount, they are expected to file a 2021 Tax return to claim their 2021 Recovery Rebate Credit which will reflect to reduce the tax owed in 2021 or include as a tax refund.

There is an electronic means to file your tax return. 2021 tax returns will be filed electronically in 2022. The tax software will help calculate how much Recovery Rebate Credit from 2021 will be paid. Recipients may need to provide routing or account numbers because the money can also be paid directly into recipients’ account numbers.

Recipients are to provide the tax year(s) and amount(s) of the Economic Impact Payments received earlier to accurately calculate the Recovery Rebate Credit. To calculate the credit, enter the amount of the Economic Impact Payment into the Form 1040 Recovery Rebate Credit Worksheet or the recipients’ tax preparation software.

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P.S. Filing for the third Economic Impact Payment must be treated separately from filing for the first and second Economic Impact Payment. only the missing third Economic Impact Payment can be included when filing the 2021 tax return.

How to Claim the First & Second Economic Impact Payments?

For those that did not get their first and second Economic Impact Payments, or got less than the full amounts, the recipient can file their 2020 tax return if it’s not filed yet or amend their 2020 tax return it is processed already. The Recovery Rebate Credit may be deducted from the tax owed in 2020 or be included as a tax refund.

The first and second rounds of Economic Impact Payments were issued in 2020 and early 2021 as advance payments of the 2020 Recovery Rebate Credit which can be claimed on a 2020 tax return.

P.S. Do not file a second tax return if you have filed one 2020 tax return that has not yet been processed. When correction is made, recipients will receive an explanation.

How Much are the Economic Impact Payments?

Remember, the first Economic Impact Payment was $1,200 or $2,400 for single or couple respectively, plus $500 for each child that qualified.

The second Economic Impact Payment was $600 or $1200 for single or married respectively plus $600 for each qualifying child born in 2020. For the third Economic Impact Payment, most families will get $1,400 per person, including all their dependents claimed on their tax return.

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