What is the Recovery Rebate Credit?
Tax season is upon us, but this year will look much different for many filers. With the high rate of furloughs and lay-offs in 2020, countless Americans needed Economic Recovery Payments—otherwise known as stimulus payments.
The IRS recently announced a new Recovery Rebate Credit program that can assist taxpayers that didn’t receive one, or both, stimulus payments.
The Recovery Rebate Credit can be claimed on your 2020 taxes when you file this year, even if you don’t usually file your taxes. The purpose of this credit is to provide taxpayers with their stimulus payments in the form of a refund. You will receive money back amounting to what you expected during the stimulus disbursements.
Who qualifies for Recovery Rebate Credit?
In order to claim this credit, you need to file IRS Form 1040 or 1040-SR and follow the worksheet instructions. This form should be completed at the time that you file your taxes.
You are likely eligible to claim the Recovery Rebate Credit if you have not received one or more of your stimulus checks and were a U.S. citizen or resident in 2020, cannot be claimed as a dependent for 2020, and have a Social Security number valid for employment and issued before the due date of your 2020 tax return.
How to Start the Form for Recovery Rebate Credit
In order to accurately complete your 1040 Form, you will need to know the amounts you should have received for your Economic Impact Payments.
If you don’t know how much you were supposed to receive, refer to IRS Notice 1444 when completing your 2020 tax return.
What happens if you owe back taxes and apply for Recovery Rebate Credit?
The credit you receive is considered a tax refund. You can receive your payment as a direct deposit, check, or apply it to your liability.
If your account is currently being garnished, then your deposit may be at risk as well.
It’s best to work with a professional on your individual case to determine how to resolve your tax debt and get the most out of your stimulus payment.
Need help filing?
Filing can be confusing and daunting, especially if you’re planning on utilizing the Recovery Rebate Credit.
TaxRise provides a team of tax professionals to take care of filing, catching up on old returns, and resolving tax debt. Give us a call or complete our brief contact form to speak with a professional today!
Any new or systemic Liens and/or Levies will also be suspended for the time being.
For taxpayers who are considered “seriously delinquent”, the IRS will suspend any new certifications for the remaining period. Any taxpayer who falls into this category in reminded and encouraged to enter into an Installment Agreement or apply for an Offer In Compromise.
The IRS will not forward any new delinquent accounts to private collection agencies at this time.
Taxpayers have until July 15, 2020 to verify to the IRS they are qualify for the Earned Income Tax Credit or to confirm their income. If the taxpayer is unable to verify their credentials or provide appropriate documents for this credit, they are encouraged to notify the IRS before the deadline. No cases will be denied this credit for failure to provide requested information until July 15.
Case workers will continue business as usual. However, most case work will be conducted remotely (video/over the phone conferences). Any requests for documentation sent by the Office of Appeals should be responded to in a timely manner to ensure a smooth process.
The IRS will continue to take the appropriate measures to stay compliant and protect the applicable statutes of limitations. In situations where certain statutes may be compromised, taxpayers are encouraged to extend such statutes. Otherwise, Notices of Deficiency will be issued by the IRS and similar actions will be pursued to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.
Practitioners are reminded that PPS wait times may be significantly longer, depending on staffing levels and allocations going forward. The IRS will continue to monitor this as situations develop.
“The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others,” Rettig said. “We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others.”
Learn how easy it is to qualify for tax savings.
