 internal revenue service IRS tax news all third economic impact payments issued parents of children born in 2021 guardians and other eligible people who did not receive all their third round EIPs economic impact payments can claim up to $1,400 per person through the 2021 recovery rebate credit but first and attempt at a joke I apologize in advance a recent line from the current administration seems both stolen and a little out of context they said this government has nothing to offer you but blood toil sweat and tears and before you ask reporter Ducey you SOB yes that is a long-winded way of saying we the government and our immediate family and constituents will be keeping your proceeds in accordance with a long-standing belief system in this country I might add maybe you've heard of it it's called communism I mean capitalist no I don't like that democracy meeting adjourned clean up aisle what the heck is happening here I'm not even sure what's all over the floor this time but it sure is sticky and stinky I are 2022-19 January 26 2022 Washington the Internal Revenue Service announced today that all third round economic impact payments have been issued and reminds people how to claim any remaining stimulus payments they're entitled to on their 2021 income tax return as part of the 2021 recovery rebate credit so quick recap here we're talking about the stimulus payments which you might be called the economic impact payments or EIPs three names for in essence the same thing however there are three of those payments that have going out and the first two payments you can think of as in their own category the third payment is a bit difference due to the timeframe in which they were sent out the first two being tied to basically the tax return for tax year 2020 and the third one being tied to the tax year and tax return 2021 that's the one we're most concerned with here most likely given the fact that we're gonna be filing for tax year 2021 by April 15th or April 18th of 2022 in general now most people didn't have to do anything special in order to get the payments they just got a stimulus payment or an economic impact payment from the government in the form of a check or in the form of an electronic transfer but of course when the government sent it out they used the tax code they use the IRS system in order to process those checks and send out those checks so how does that work well they got the economic impact payments were tied to the 2020 or 2021 tax return you're not going to see economic impact payment or stimulus payment on the tax return you're going to see recovery rebate credit now those two terms are a little bit confusing because they don't really sound alike you got the economic impact payment and the recovery rebate credit so in other words they said we're going to give the recovery rebate credit through the tax system but we want to give out the goodies now we don't want to have to wait till someone files the tax return which makes sense if you're in a crisis type of situation I think they're getting more addicted to this kind of thing at this point in time it seems to be something they're doing more and more but obviously if they're trying to get the money out they sent it out in the form of a pre payment the only way they could do that is to base it on an estimate of the prior tax return so they looked at the prior tax return and then they sent everybody basically these economic impact payments in accordance with the information that they currently had on hand as a general rule that means that most people should have gotten the full economic impact payment that they need and that would mean if that were the case that you're not going to get any extra benefit for the recovery rebate credit on the tax return because the whole point was to give the entire thing out early in the form of the pre payment which is different than say the child tax credit which actually I think people can make more sense of and has a similar system in other words the child tax credit they gave out a pre payment this year they called it an advanced child tax credit and people might have a little bit more of an awareness of that because they've dealt with the child tax credit before where they've never dealt with a recovery rebate credit and they can see that they got a pre payment pot at this point and they only got part of the pre payment so they're still going to have to calculate the child tax credit on the tax return to get the rest of the benefit that's not the same case with the with the economic impact payments in that it was a new thing last year and continued on to this year it was a recovery rebate credit which no one has seen before or calculated before and then they gave out the advanced payment the entire advanced payment so that most people would not even still have to file or do anything with the recovery rebate credit because they should have got the entire advanced payment in advance so that's going to be the kind of the difference between those two of them so the bottom line is if you didn't get your proper amount of the third economic impact payment due to whatever circumstance it was because they had to make an estimate on it in order to do that and that and you could have a situation where your dependents were different in the prior year possibly you're in a situation where you have split custody of a child they're dependent on one year on one one parents return in another year and another parents return or something like that or you had an income level that was drastically different between 2020 and 2021 when they base the estimate on or something like that if those differences were there then you're going to have to file the recovery rebate credit to determine if you need any any extra benefit from it however if you got the full payment then you're basically the two things will will wash out you would have already received the recovery rebate credit in advance if you have the first two recovery rebate credits for those first two if there's any problems with those you've got to go back to the prior tax return 2020 because those are tied to the prior tax return in a similar fashion alright so parents parents of a child born in 2021 or parents and guardians who added a new qualifying child to their family in 2021 did not receive a third round economic impact payment for the child and may be eligible to receive up to one thousand four hundred dollars for the child by claiming the recovery rebate credit so that's one of the problems obviously if a dependent wasn't on the tax year that they made the estimate in so we're looking at two thousand twenty one they filed the estimate for the economic impact payments on two thousand twenty and a new child was born then of course in two thousand twenty one that's the tax year then then they wouldn't have sent out the economic impact payments in accordance with that child that was born in two thousand twenty one and you might be eligible for the recovery rebate credits in that case in addition to any kind of other credits that would be involved like child tax credit so while some payments of the economic impact payments from two thousand twenty one may still be in the mail including supplemental payments for people who earlier this year received payments based on their two thousand nineteen tax returns but are eligible for a new or larger payment based on their recently processed two thousand twenty tax return the IRS is no longer issuing payments as required by law through December thirty first the IRS issued more than one hundred seventy five million third round payments totally over four hundred billion dollars to individuals and families across the country while simultaneously managing and extended filing season in two thousand twenty one so the IRS is stretched stretched out for and again you can you can argue with the laws or or not but the IRS isn't obviously the department that's in charge of making the laws they're the ones that are basically having to put in place these laws and a lot of these laws of course have been going through the IRS so I'm sure it's been you know difficult times there so third brown economic impact payments were advanced payments of the two thousand twenty one recovery rebate credits and late January the IRS began issuing the letter six four seven five the third round economic impact payment to recipients of the third round economic impact payment this letter will help economic impact payment recipients determine if they are entitled to and should claim the recovery rebate credit on their two thousand twenty one tax returns when they file in two thousand twenty two the American Rescue Plan Act of two thousand twenty one signed into law on March the eleventh two thousand twenty one authorized a third round of economic impact payments and required them to be issued by December thirty first two thousand twenty one the IRS began issuing these payments on March twelfth two thousand twenty one and continue through the end of the year eligible parents of the children born in two thousand twenty one and families that added qualifying dependents in two thousand twenty one should claim the two thousand twenty one recovery rebate credit so that obviously they have it in bold here so that's one of the big things that they're trying to get across here is that if you had a new child or adopted a new child or something in two thousand twenty one they wouldn't have given out in the stimulus payment so you want to take that into consideration on the tax return most other eligible people already received the full amount and won't need to claim the credit on their tax return now if you use the free file software hopefully it'll it'll kind of i hope you guide through this this stuff uh... so the sudden software is almost mandatory i would think even for low in almost especially for low income tax returns these days which are possibly harder then mid-level range income tax returns due to all the all the these uh... these laws there so the third economic impact payment was an advanced payment of the tax year two thousand twenty one recovery rebate credit the amount of the third round economic impact payment was based on the income and number of dependents listed on an individual's two thousand nineteen or two thousand twenty income tax return the amount of the two thousand twenty recovery rebate credit is based on the income and number of dependents listed on an individual's two thousand twenty one income tax return families and individuals in the following circumstances among others may not have received the full amount of the third round economic impact payments because their current circumstances in two thousand twenty one were different then they were in two thousand twenty so okay so they they've got a pretty basic kind of of system to send out these payments they sent them out to the whole country right and there but they're based on a couple things that uh... that could change from two thousand twenty two thousand twenty one which one would of course be the dependents and two would be your your income levels because there's going to be a phase out threshold so if those differences happened that's when you're gonna have this problem of of having to deal with the recovery rebate credit possibly a good thing because you might get more of a refund in some instances in that case so these families and individuals may be eligible to receive more money by claiming the two thousand twenty one recovery rebate credit on their two thousand twenty one income tax return so obviously they're framing it as a good thing you know because they they couldn't get the estimate right obviously because these changes happen and there's an estimate so now you might be eligible for some more money although you could possibly be be required to pay money because they over sent the money in some cases and we'll see what they do with that but here we go parents of the child born in two thousand twenty one who claim the child as a dependent on their two thousand twenty one income tax return may be eligible to receive a two thousand twenty one recovery rebate credit up to one thousand four hundred dollars so new child born or adopted in two thousand twenty one might be eligible for the recovery rebate credit which you would not have gotten because they didn't know about it because it was not the two thousand twenty one tax return all eligible parent parents of qualified children born or welcomed through adoption or foster care in two thousand twenty one are also encouraged to claim the child tax credit worth up to three thousand six hundred dollars per per child born in two thousand twenty one on their two thousand twenty one income tax return so you probably also didn't get the advanced child tax credit so now you got the child tax credit which is higher you know in two thousand two thousand twenty one than in prior years families who added a dependent such as a parent a nephew or a niece or a grandchild on their two thousand twenty one income tax return who was not listed as a dependent on their two thousand twenty income tax return may be eligible to receive the two thousand twenty one recovery rebate credit of one thousand four hundred dollars for this dependent so you got another dependent on their uh... in another way that wasn't on there in the prior years they didn't send out the the check because they didn't know about it because it wasn't on two thousand twenty one tax return but it is on it was not two thousand twenty but it is on two thousand twenty one which is the tax year we're actually looking at so you would have to then adjust it and in this case you'd be a positive adjustment adding to the refund single filers who had incomes above eighty thousand two thousand twenty but less than this amount two thousand twenty one so there's an income phase out threshold so if your income was higher in two thousand twenty then in two thousand twenty one you might have been above the threshold you didn't get all the money because your income was too high in two thousand twenty but then you're like hey i didn't make as much in two thousand twenty one because stuff's crazy these days and uh... and therefore that your you they didn't give you enough money because two thousand twenty one your income was lower and below the phase out so then you'd have to file the recovery credit you might ask well what if it was the opposite well then you would think that you'd owe some of the money back right which i'm still waiting for them to say we're not going to require you to pay it back here but you would think that if they overpaid uh... in this situation was reversed which they're not clearly emphasizing here you would think that you you might have to reduce the refund in that case but in the case to marry couples he filed a joint return in head income of one hundred sixty thousand in two thousand twenty but less than this amount to tell you what in head of household fathers to have incomes above one hundred twenty thousand in two thousand twenty but less than this amount in two thousand twenty one may be eligible for two thousand twenty one recovery we make credit up to one thousand four hundred dollars per person single filers who had income of the tween seventy five thousand in eighty thousand to two thousand twenty but lower in comes in two thousand twenty one married couples who filed a joint return and had incomes between 150,000, 160,000 and 2,020 but had lower incomes in 2,021 and head of household filers who had incomes between 112,500, 120,000 and 2,020 but had lower incomes in 2,021 may be eligible for a 2,021 recovery rebate credit. Individuals must claim the 2,021 recovery rebate credit on their 2,021 income tax return in order to get this money. The IRS will not automatically calculate the 2,021 recovery rebate credit. The IRS began accepting 2,021 income tax returns on January 24th. Most other eligible people already received the full amount of their credit in advance and don't need to include any information about this payment when they filed their 2,021 tax return. The IRS issued payments called quote plus up in quote payments to individuals who initially received a third round economic impact payment based on information on their 2,019 tax return and were eligible for a larger amount based on information on their 2,020 tax return. Avoid processing delays when claiming the 2,021 rebate credit. The IRS strongly encourages people to have all the information they need to file an accurate return to avoid processing delays if the return includes errors or is incomplete. It may require further review while the IRS corrects the error which may slow the tax refund. To claim the 2,021 recovery rebate credit individuals will need to know total amount of their third economic impact payment including the plus up payments they've received. People can view the total amount of their third round economic impact payments through their individual online account. There's a link to that here. The IRS also sent the letter 6475 through March to those who were issued a third round payment confirming the total amount for their 2,021 for married individuals filing a joint return with their spouse. Each spouse will need to log into their own online account to review their own letter for their portion of their couple's total payment. The IRS urges recipients of stimulus payments to carefully review their tax return before filing having this payment information available while preparing the tax return will help individuals determine if they are eligible to claim the 2,021 recovery rebate credit for missing third round stimulus payments. If eligible for the credit, they must file a 2,021 tax return using the total amount of the third payments from the individual's online account or letter 6475 when filing a tax return can reduce errors and avoid delays in processing while the IRS corrects the tax return. The get my payment application will no longer be available as of January 29, 2022 and individuals are encouraged to access online account to view their first, second and third economic impact payment amounts under tax records file electronically and choose direct deposit. The amount of the 2,021 recovery rebate credit will reduce the amount of tax owed for 2,021 or if it's more than tax owed it will be included as part of the individual's 2,021 tax refund. Individuals will receive their 2,021 recovery rebate credit included in their refund after the 2,021 tax return is processed. The 2,021 recovery rebate credit will not be issued separately from the tax refund. To avoid processing delays, the IRS urges people to file a complete and accurate tax return. Filing electronically can tax software to figure credits and deductions including the 2,021 recovery rebate credit the 2,021 recovery rebate credit worksheet on form 1040 and form 1040 S instructions can also help. There's a link to that here. The fastest and most secure wait for eligible individuals to get the 2,021 tax refund that will include their allowable 2,021 recovery rebate credit is by filing electronically and choosing direct deposit. Anyone with income of $73,000 or less including those who don't have a tax return filing requirement can file their federal tax return electronically for free through the IRS free file program. There's a link to that here. The fastest and most secure way to get a refund is to file electronically and have it direct deposited, countless contactless and contactless and free contactless. Don't see that word all the time into the individual's financial account. Bank accounts, many prepaid debit cards and several mobile apps can be used for direct deposit when taxpayers provide a routing and account number. IRS.gov forward slash filing link to that here has details about IRS free file link to that here. Free file fillable forms link to that here. Free VITA and TCE tax preparation sites. There's a link to that here in communities and finding a trusted tax professional. There's a link to that here. Claim 2,021 to claim 2020 recovery rebate credit for missing first and second round economic impact payments. So now we're going back to the prior year, the prior to or the first two economic impact payments which are tied to 2020 and not 2021. All first and second round economic impact payments have been issued. The first and second round economic impact payments were advanced payments of tax year 2020 recovery rebate credit. People who didn't qualify for a first and second economic impact payment or got less than the full amount may be eligible to claim the 2020 recovery rebate credit on a 2020 income tax return. Individuals will need to file a 2020 tax return if they have not yet or amend their 2020 income tax return if it's already been processed. If the individual's 2020 income tax return has not yet been fully processed, the individual should not file a second return. Some returns need special handling to correct errors or credit amounts which can delay processing. Yeah, they have a few delays at the moment. The IRS is having to correct significantly more errors in 2020 tax returns than in previous years. Yeah, yeah. If the IRS corrects the credit claimed on the return, the IRS will send a letter with an explanation. More information can be found at the links below. Online account information, recovery rebate credit 2021, recovery rebate credit, frequently asked questions. 2020 recovery rebate credit, frequently asked questions. There's links to that stuff here. There'll be a link to this in the description.