What is Recovery Rebate Credit 2021?
An act called CARES (Coronavirus Aid, Relief, and Economic Security) was passed in March 2020, giving financial aid to people who made less than $75,000 or couples who made $150,000 or less. This act provided people with financial assistance like the Economic impact payment or Recovery rebate credit.
The Recovery Rebate Credit is a type of one-time benefit that most people in the US received last year as Economic Stimulus Payment. But the people who did not receive the rebate credit because of certain reasons will be able to claim the Recovery Rebate Credit in 2021.
Those who were eligible but did not claim the full amount in the first stimulus will automatically become eligible for the 2021 recovery rebate. The recovery rebate credit promises a fund of $1,200 to an individual or $2,400 to a married couple filing jointly, with $500 for each qualifying child. However, people have to cater to the eligibility criteria.
What is the eligibility criteria for the Recovery Rebate Credit 2021
Following are the criteria that determine one’s eligibility for the recovery rebate credit 2021:
The first and foremost condition is that the person has to be a US citizen or US resident alien to claim the impact payment.
The payment of $1,200 will be granted to an adult (above the age of 17) who has a Social Security Number valid for employment in the US and is not dependent on another taxpayer.
A payment of $2,400 shall be claimed by a team (if they file jointly) provided both of them have their social security numbers. One major exception here is that if one of the spouses is a member of the American Armed forces, then even if only one person has the Social security number, both become eligible for the rebate.
Apart from this, $500 is granted to all the qualifying children. Qualifying children are the children, grandchildren, brothers, sisters, nieces, nephews, stepbrothers, and stepsisters of the adult member of their household.
The other requirements are to live with the adult for more than 6 months and be under the age of 17 and have a valid Social security number to authorize their work. There is no end limit to the number of qualifying children an adult can have.
All the above criteria will only be considered if your Adjusted Gross Income (AGI) is not more than:
If a person does not meet the above three requirements, the payment will get lowered.
The payment will reduce by 5% of the amount by which the AGI exceeds the threshold income value. In other words, the recovery rebate amount is reduced by $5 for every $100 above the adjusted gross income thresholds.
Who are not eligible for claiming the rebate?
I am in debt. Am I eligible for getting the rebate?
If you owe child support payments, back taxes to IRS, or student loan debt, the recovery rebates conditions can be slightly different for you.
To the relief of all the people overdue on student loans – you shall receive the full amount of the recovery rebate.
Irrespective of whether you owe back taxes to the IRS or not, you are eligible to get the full payment.
According to the family law and policy, Child support is an ongoing or periodic payment made by a parent to the children of a terminated relationship for their financial well-being. If you are overdue on child support, some amount on your stimulus check can be reduced or even eliminated. The amount reduced will depend upon the child support amount you owe. The Bureau of the Fiscal Service shall send you a notice if you were eligible to get included in this category.
Bank Overdraft Fees:
An overdraft allows a bank account holder to borrow a set amount of money even if the account has insufficient or no funds. There is an interest on this loan and a fee per overdraft. If you use direct deposit and owe overdraft fees to your bank, the bank can deduct that from your recovery rebate credits.
Does recovery rebate credit count against the eligibility for government benefits?
To answer this question, you need to understand that the stimulus check is not counted as your income. This payment is not calculated as a resource for 12 months; neither is it necessary to report this income to the IRS. The recovery rebate is a form of a refundable tax credit against the federal income taxes of 2020. It does not get included in the gross/taxable income for 2020. The recovery rebate credit is just an aid to people facing a financial crisis during the global pandemic.
Regardless of your employment status, you can receive the stimulus check if you are eligible for it. Hence the stimulus credit does not impact your eligibility for enjoying government benefits.
How will I receive the stimulus check?
You will automatically get the payment delivered as a direct deposit or at a mailing address, only when you have filed a tax return for the year 2019 or 2018. The IRS shall use that tax information to calculate the amount of the payment you deserve.
The payments will be sent to you if you are one of these – Railroad retirees, Social Security recipients, SSDI, SSI, and VA beneficiaries. The information stored on the file of the Social security administration is used to complete this transaction.
If you have filled an online form, you can give ut your direct deposit information there (if any). If not, you can leave your mailing address, and the IRS will mail your check to that address.
What is the deadline for the recovery rebate credit?
If you want to issue your payment this year, you need to submit all the required information to the IRS by November 21, 2020. In case you missed the deadline, you can get your payment in 2021 by filing a 2020 tax return.
What is the ideal way to receive the recovery rebate credit?
The IRS wants to complete the procedure for payments as early as possible; hence, they are trying to deposit the money quickly. The mode you choose to get the credit through determines how fast you will get your payment. Direct deposit is the best, safest, and quickest way to receive the stimulus check. Everyone who holds a bank account should choose direct deposit as the method of payment receipt. But if you do not have a bank account, providing the IRS with your mailing address will do the job.
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