Recovery Rebate Cr or Stimulus Checks

[Ochumare]

Hello,  I am new to the community.  Would much appreciate your clarification on this matter please; is regarding the Recovery Rebate or Refundable credits, a/k/a Stimulus check  during TY 2020.

Simple scenario  -  (Single, no dependents)

1. The EIP1 check ($1,200) was received by clients in 2020, no issues there....   The EIP2 check ($600) was received in 2021...  My question is:  Do we report or recognize the EIP2 ($600) in TY 2020 or 2021?  Since it was received in FY 2021, but issued in 2020.

2.  Is there a table or schedule for TY 2020 that reflects the client's liability owed from the stimulus amount received -vs- the earned income?  Is there a threshold amount?   I noticed that the lower the income the less they have to refund from the stimulus money and the higher the income the more is deducted.

Thanks in advance

[Just-Lisa-Now-]

Both get reported, you'll see Lines 16 and 19 of the Recovery Rebate Worksheet asks for each of them

Im not sure I understand your second question, "earned income"  doesnt really come into play for the Recovery Rebate/Stimulus, its based on AGI.

There is a phase out for the amount you're entitled to, from 75-100K for single and 150-200k for married joint, for every $100 over the lower threshold amount, they reduce the stimulus by $5.


"I noticed that the lower the income the less they have to refund from the stimulus money and the higher the income the more is deducted."

I 'm not sure I understand this sentence.

[Accountant-Man]

There is no refund that I am aware of.

Look at the worksheet. That will tell you that you have to enter BOTH payments.

[Ochumare]

Thank you so much for your answer.   Great help.   My apologies for the confusing second question.  I meant to say “income”.  

There is a phase out for the amount you're entitled to, from 75-100K for single and 150-200k for married joint, for every $100 over the lower threshold amount, they reduce the stimulus by $5.

I think this somewhat addresses my concern, but not quite.   In my particular case,  my client had a total income of $56k yet the full ($1,800) amount was deducted.  ( Ie. Client had a tentative refund of $1,500.  After I entered the $1,800 stimulus checks now shows she owes the IRS $300.   What am I doing wrong????

[taxiowa]

I am pretty sure the IRS knows how much each stimulus was.  Hence you have to enter the total of $1,800 on the recovery wkst.  So unfortunately your client owes $300.

[Ochumare]

Thanks for your assistance.  

[Skylane]

How are you, Taxi? It’s been a long time.

[Just-Lisa-Now- · Accepted solution]

In my particular case,  my client had a total income of $56k yet the full ($1,800) amount was deducted.  ( Ie. Client had a tentative refund of $1,500.  After I entered the $1,800 stimulus checks now shows she owes the IRS $300.   What am I doing wrong????

So your client is entitled to the full 1800, but they already got it advanced to them during 2020, so they don't get it on the tax return.

If they had not gotten the advances, then they would see it credited on the tax return.

[Just-Lisa-Now-]

For those that constantly  monitor the refund meter while preparing the return, it may be a good idea to complete the RRC worksheet first thing, then you wont see that potential credit mixed into the refund showing up in the corner.

[taxiowa]

Good Sky Man.  I just don't care for the format any more.  I go to page 2 and open thread and when I go back out is is page 1.  Also you reply to thread and can't go right back to main base.  I don't have time to keep going back and forth.

[Ochumare]

Thanks for your response.    This year is going to be a bit challenging for us as we try to explain this to clients since most of them saw the stimulus  checks as free money.    

[Ochumare]

Can you recommend an IRS link that explains the stimulus monies were previously advanced hence affecting refund, so we can show it to clients?????

[Just-Lisa-Now-]

 They already got it advanced to them, so it doesnt get added to their refund. 

Show them the RRC worksheet.

Theyre not losing anything, they got the money already.