I feel dumb even asking this...RRC, MFJ with 2 kids, over 200K AGI qualifies?

[Just-Lisa-Now-]

Am I misunderstanding how the RRC works?  I thought MFJ over 200K you got nothing? 

2019 income was over 250k and they had no kids so they got no advances, had twins in 2020 but income is still over 200k and its computing some of the RRC?

[Just-Lisa-Now-]

Apparently having a couple kids adds $$ to the top end of the phase out.

[qbteachmt]

"Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above"

The RRC just goes down to $0 based on being reduced.

[qbteachmt · Accepted solution]

Here is how the IRS computes it:

https://www.irs.gov/newsroom/calculating-the-economic-impact-payment

Example: "For eligible individuals with no qualifying children, the payment is reduced to $0 if their AGI is at least:

• $99,000 if filing as single or married filing separately
• $136,500 if filing as head of household and
• $198,000 if filing married filing jointly

For individuals with qualifying children, these total-phaseout amounts increase by $10,000 for each qualifying child. For example, for an eligible individual filing as married filing separately with 3 qualifying children, the individual’s payment is reduced to $0 if his or her AGI is $129,000 or more."

[IRonMaN]

Well, that was rather rude.  

Sorry QB, that was just too tempting based on the crowd that has filtered in tonight.

Lisa - looks like those twins picked the right year to show up.  Saved mom and dad $520.  Tell your clients to stick those big bucks in a 529 plan -------------- they owe it to those kids 😃

[splash1]

what tax year are they basing the calculation on?

[qbteachmt]

Perhaps it would help to review what is really happening:

The funds were paid out as Advanced payment against a projection. The projection used 2018 or 2019 tax returns. But 2020 is the Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.


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

Interactive wizards portal 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

One for each EIP.

[splash1]

that appears to be correct as the calculation is based on the 2020 AGI as you indicated on worksheet.

[splash1]

my situation is taxpayers had agi>200K with no kids in 2018, 19 and received no stimulus money in round 1 or 2. 2020 agi is 113K and RRC is calculating $3600 due giving them the max for both rounds. It appears they are basing everything on 2020 return.  It that accurate?

[Just-Lisa-Now-]

yep that 10k per kid slipped past me!

[splash1]

thanks, simple answer projections vs actuals

[dkh]

yes RRC is based solely on 2020 return.   EIP1 and EIP2 were advances towards this credit.   

See @qbteachmt  answer on this post.......

[qbteachmt]

"It appears they are basing everything on 2020 return.  It that accurate?"

Remember that 2020 is when all the Impact started. Only 2020 matters.