2nd Covid relief payment reporting

[DGEmbry]

Does anyone know if we have to report the 2nd Covid relief payment-- received in 2021-- on the 2020 tax return 1040 or should it be reported on the 2021 return next year?

Thank you.

[George4Tacks]

Both go on the 1040 input. The input for each is in the same screen. 

[DGEmbry]

Hi George4Tacks,

Thank you for the information. Would you happen to know where this is written? either in f1040 instructions or somewhere on IRS site. Just can't find anything in writting.

Thank you!

[TaxGuyBill]

It is not a "COVID relief payment".  It is an advance payment of a 2020 tax credit.  A 2020 tax credit goes on the 2020 tax return.

[DGEmbry]

Hi TaxGuyBill

I understand that both the 1st and the 2nd payments are an advance payment tax credit, but I thought that we could take one on the 2020 return and the other one on the 2021 return if it meant maximizing the tax benefit allowed for our client. Have you seen anything in writing you could refer me to?

Thank you,

[TaxGuyBill · Accepted solution]

Where did you get that idea?

The law (IRC §6428A, from the COVID-related Tax Relief Act of 2020) says:

‘‘SEC. 6428A. ADDITIONAL 2020 RECOVERY REBATES FOR INDIVIDUALS.
‘‘(a) IN GENERAL.—In addition to the credit allowed under section 6428, in the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the sum of—

[DGEmbry]

Hi TaxGuyBill,

Thank you for the code section, much appreciate it. As to where I got the idea of reporting in 2021 the 2nd payment, I take it from the spirit of the law that year paid year reported. Make sense? 

[qbteachmt]

Spirit of the law? It's in the 1040 instructions:

What's New
Economic impact payments—EIP 1 and EIP 2. Any economic impact payments you received are not taxable for federal income tax purposes, but they reduce your recovery rebate credit.
Recovery rebate credit. This credit is figured like last year's economic impact payment, except eligibility and the amount of the credit are based on your tax year 2020 information. See the instructions for line 30 and the Recovery Rebate Credit Worksheet to figure your credit amount.

[qbteachmt]

I forgot I have this bookmark:

https://proconnect.intuit.com/community/federal-taxes/help/recovery-rebate-credit-for-tax-year-2020-...

[DGEmbry]

Hi TaxGuyBill,

Thanks to your code section, I found exactly what I need in this sequel:

§6428. 2020 Recovery rebates for individuals (f) (3) (A) Timing
The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible. No refund or credit shall be made or allowed under this subsection after December 31, 2020.

Cheers!