With tax season for this year now in full swing, attention is going to turn once again to stimulus payments — even though no new federal checks have gone out since December. The IRS is alerting people about several important stimulus-related tips and instructions to follow when preparing their federal return this year. One of which has to do with something called the Recovery Rebate Credit.
Below, we’ll tell you what you need to know in order to benefit from this tax credit. Among the most important points: The IRS is urging people to file their returns electronically since the agency is more backlogged than ever this year. Also, double- and triple-check your return for mistakes. Because the last thing you want, at a time when the agency is already incredibly backed up, is for a mistake to add a further delay in processing your return — and getting a refund out to you.
How to claim recovery rebate credit
The 2021 Recovery Rebate Credit will get money out to anyone who didn’t get some or all of the stimulus benefit they were eligible for last year. To claim the credit when preparing your federal tax return this year, you’ll need to know the total amount of the third-round stimulus check you got in 2021. As well as any plus-up payments.
Your third-round stimulus check amount is viewable via your IRS online account page here. The IRS is also sending out Letter 6475 through March to everyone who got a third stimulus check in 2021. It will confirm the payment amounts, and you’ll also need to make sure they match the tax return you prepare.
Per the IRS: “The amount of the 2021 Recovery Rebate Credit will reduce the amount of tax owed for 2021, or, if it’s more than the tax owed, it will be included as part of the individual’s 2021 tax refund. Individuals will receive their 2021 Recovery Rebate Credit included in their refund after the 2021 tax return is processed.”
Said another way: The IRS is not issuing 2021 Recovery Rebate Credits separately from tax refunds.
IRS stimulus update
The points above from the IRS are part of an expanded stimulus-focused fact sheet that the tax agency published on its website just a few days ago. With tax season now officially underway, it’s as important as ever to peruse this publication if you have any other questions about your return this year. As well as any of the stimulus payments that went out in 2021.
For example, the IRS said it has now sent out all third-round stimulus checks. There were more than 175 million of those payments sent out through December 31, 2021. And they totaled more than $400 billion.
Other important points from the IRS’ new fact sheet:
- “To avoid processing delays, the IRS urges people to file a complete and accurate tax return. Filing electronically allows tax software to figure credits and deductions, including the 2021 Recovery Rebate Credit.”
- Anyone with income of $73,000 or less can file their federal tax return electronically for free. You can do that through the IRS Free File program.