Recovery Rebate Credit

[suesue1]

My clients received letters they were issued $1400 each (joint return) - however they did not get the $$.

Put 0 in the worksheet for the $2800 and worksheet shows they get a credit of only $700 on the return. 2020 gross income was under 150,000 but 2021 income 157,000. Is the worksheet using the 2021 income to figure the credit? Seems they should be getting the full $2800 credit. What's up??

[jeffmcpa2010 · Accepted solution]

They will need to report the $2800 the IRS sent them. Most likely they received it on a debit card and cut it up thinking it was some kind of scam (like some of my clients did).

They can file form 3911 (separate from the return) and request the IRS to trace the payment and re-issue.

As to the amount of the credit - the advance credit was an estimated amount based on the prior return filed. The 2021 return is a "reconciling return" which allows you MORE credit if you are entitled to it based on your 2021 return, but fortunately did not require a repayment if your income increased in 2021.

[Just-Lisa-Now-]

their 2021 income will limit the amount, but you have a bigger issue...

If IRS sent them the 6475 letters that they DID get it, (most peoples were based on their 2019 income, not 2020) and they insist they didn't, you should be filing a Form 3911 to trace it, DO NOT put on the return that they didn't get it, IRS will adjust the account.

This is actually better for them.   If they can get that 2800 advance reissued to them (assuming they really didnt get it, but Im betting its in their bank statement for March 2021), they make out better than getting the 700 allowed with the 2021 income.