Recovery Rebate Credit claim/calculation based on 2019 income since 2020 income was higher.

[vkb]

I've entered my clients Economic Impact Payments received info into the Recovery Rebate Credit boxes in ProConnect, he received Economic impact payment 1 $1400 based on 2019 AGI but he didn't receive Economic impact payment 2 so entered '-1' in box, and his 2020 income is higher but I want to use 2019 income to get 2nd stimulus payment for him in tax filing of 2020, with this entry's form 1040 line 30 is still blank? any idea? please suggest options.

Thanks in advance.

[abctax55 · Accepted solution]

The option would be to revisit the rules.  The computation is based on 2020's income; you don't get to pick/choose the year.  EIP#1 & EIP#2 were 'prepayments' that are reconciled on the 2020 return.  If you got too much, consider yourself lucky as nothing has to be paid back. 

[George4Tacks]

The client can initiate a trace on EIP2 that may have been received as a debit card and thrown in the junk mail pile. See Q: F3 https://www.irs.gov/newsroom/questions-and-answers-about-the-first-economic-impact-payment-topic-f-p...

[qbteachmt]

"but I want to use 2019 income to get 2nd stimulus"

We don't get what we Want. We do what applies.

"based on 2019 income since 2020 income was higher."

You are confusing the EIC and the EIP.

You have some reading to do.

Perhaps it would help to review what is really happening for EIP “stimulus” funds: The funds were paid out as Advanced payment against a projection. The first two payouts were projected based on 2018 or 2019 tax returns, but the eligibility is part of tax year 2020 as Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.

If the person is not a dependent in 2020, then they would be eligible for consideration as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent." You must correctly address whether they Can be Claimed as a dependent on someone else’s tax return.

The third payout which started in Jan 2021, has different eligibility rules as to dependents and this payout is a projection, using 2019 or 2020 tax returns, then reconciled against Actuals on the 2021 tax return.

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal includes one for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

https://www.irs.gov/newsroom/irs-is-issuing-third-round-of-economic-impact-payments

One for each of the three EIP “stimulus” payments.