Recovery Rebate Credit can be a quite confusing tax credit that is newly introduced by the Internal Revenue Service for the 2020 taxes. If you’re a qualifying individual that didn’t get the first Economic Impact Payments that were handed out in early 2020, you will get it once you file your tax return.
This is a one-time credit that will either increase your tax refund or reduce the amount owed. If you received the full Economic Impact Payment in 2020, know that you aren’t eligible for this credit. But if you were eligible for the first Economic Impact Payment under CARES Act but didn’t take it, you now can when you file a return.
Unlike the second stimulus, the Recovery Rebate Credit is $1,200 for single filers and $2,400 for joint filers with an additional $500 per qualifying child. When you file a federal income tax return, you aren’t required to enter anything specific about the recovery rebate credit.
You can treat this as stimulus for those who haven’t got their first Economic Impact Payments.
IRS Treas 310 and TaxEIP2
If you’ve seen IRS Treas 310 or TaxEIP2 on your bank account, know that the second round of stimulus payments have already been sent to you. You will get either one of the above as the sender’s information.
While the first stimulus payments were $1,200 for individuals and $500 per qualifying child, the second stimulus (Economic Impact Payment 2) is $600 for individuals (joint filers get $1,200) and $500 per qualifying child.
If you have a dependent over the age of 17 – for example, a college student aged between 18 and 24, they do not qualify. For you to get the extra $600, the child must be a qualifying child. You can check the 2021 child tax credit requirements to determine whether or not a child is a qualifying child for tax purposes.