global Tax What is the Recovery Rebate Tax Credit? January 25, 2021 Didn’t receive an economic impact payment? You may be eligible for the recovery rebate credit, authorized by the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. If you did not receive a first or second economic impact payment (EIP), you may be able to claim the recovery rebate credit on your 2020 tax returns. Who can claim this credit? We explore below. What is an economic impact payment? Filers with adjusted gross income (AGI) of up to $75,000 for individuals and up to $150,000 for married couples filing jointly were eligible to receive a check to offset the negative financial impacts of the COVID-19 pandemic. This was considered an advance of a credit to be claimed on the 2020 tax return. For the first round of economic impact payments, single taxpayers with a social security number and an AGI under $75,000 received $1,200. Those filing jointly without children received a payment of $2,400. Parents received an additional payment of $500 for each child 16 years or younger. For the second round, single taxpayers received $600 and married filing jointly received $1,200. Additionally, each qualifying child received $600. What is the recovery rebate tax credit? Those who did not receive the full amounts of both EIPs through the two rounds of advances can claim the Recovery Rebate Credit on their 2020 form 1040 or 1040-SR. Generally, the credit will increase the amount of your tax refund or decrease the amount of tax you owe. Who is eligible? You are eligible for the Recovery Rebate Credit if: You were a U.S. citizen or U.S resident alien in 2020You cannot be claimed as a dependent of another taxpayer for tax year 2020You have a social security number valid for employment that is issued before the due date of your 2020 tax return (including extensions).How do you claim the credit? To claim the credit, you must file form 1040 or 1040-SR even if you are not normally required to file a return. Those with income of $72,000 or less can file their federal tax return, for free, electronically through the IRS’ Free File Program. Questions? Contact us.