Making the Most of Recovery

No surprise here: COVID continues to exert its impact on tax legislation and filing, but that’s good news for many. Last year, millions of Americans were eligible for a third stimulus check worth up to $1,400 per every qualifying individual in their household. If you haven’t yet received it or are missing the full amount for which you’re eligible, you may be eligible to claim the 2021 Recovery Rebate Credit.

Similar to the original eligibility rules, the 2021 recovery rebate credit is generally equal to the calculation of your third-round stimulus check, using information from either your 2019 or 2020 tax return. If you didn’t file a return for either of those years, the IRS sent a third stimulus check based on whatever information, if any, was available to it, i.e. the Social Security Administration (SSA) or Veterans Administration (VA). That said, the final value of your credit may be adjusted based on the information found on your 2021 tax return. Perhaps the IRS didn’t know you adopted a child or had a baby in 2021; maybe your income situation declined. All those circumstances could combine to make you eligible for additional stimulus money.

Unlike child tax credit payments, the IRS doesn’t expect taxpayers to repay any overpaid money. The IRS, however, will not automatically calculate the 2021 recovery rebate credit for you, meaning it’s up to you to make sure you don’t leave any money behind.

If you forgot how much you received last year, if any, don’t panic. The IRS sent a notice – Letter 6475 – earlier this year. If they did not, you can also find the total amount to subtract from the credit on your IRS online account, if you have one. Lastly, you can also call the IRS’s automated phone transcript service at 800-908-9946 for it be sent by mail or submit Form 4506-T.

If you have already filed 2021 taxes and didn’t claim the credit appropriately or missed it altogether, you can amend a submitted tax return—though that could lead to longer wait times.

This article is intended to provide basic information for starting a discussion with a financial professional about your specific financial situation. Please consult with a financial professional regarding your specific financial situation before making any financial decisions.

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