Recovery rebate credit er

[nancy0264]

I have a client that didn't get the 1st stimulus check of $1200. She fell below the threshold with AGI of $71,227.  For 2020 her AGI is $99,148.  The recovery rebate is calculating an $8 credit even though she is entitled to the $1200 because it is picking up the 2020 AGI that is higher than 2019.  Do I override the form and put in the 2019 AGI?  and if I do will the override let me e-file the return? Will it be triggered by the IRS? Should I have her set up an account with the IRS and see if the check was issued originally? Any help would be greatly appreciated. 

Thank you.

Nancy

[qbteachmt]

"even though she is entitled to the $1200 because it is picking up the 2020 AGI that is higher than 2019." <== meaningless.

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.

[nancy0264]

Thank you for the input.  She wasn't anyone's dependent and she got the second check of $600 but not the first.

[PATAX]

QB is correct... It is based on the 2020 return... Just my opinion

[dkh · Accepted solution]

When was the 2019 tax return efiled ?  If after, EIP#1 was issued then  EIP#1 would have been based off of 2018 AGI - was it over the AGI limit?      If the taxpayer is unsure if EIP#1 was received, then yes, have them setup an account w/IRS to verify what was issued to them.    Don't count on IRS correcting/adjusting the tax return to give the taxpayer any RRC due to them.

[qbteachmt]

Even if a payment was based on Tax Year 2018 or Tax Year 2019, neither condition matters now.

There is no Option for AGI year. Don't confuse this with the EIC. There is no provision for "let me use any year AGI to qualify for EIP."

It is only based on 2020. That tax filing is the reconciliation worksheet. It will show what they would be entitled to. You need them to confirm what they got. Yes, their own Bank records, the IRS Tax Account, any 1444X they got (my own 1444C just arrived today). use all of this to confirm them telling you "I didn't get my money" because this is your due diligence. When it turns out they did get the money, you will be glad to have made sure of this before filing.

[PATAX]

@nancy0264  just for what it is worth .... I had a few people initially say that they did not get one or both of the checks, but it turned out that they did... Also out of the few people who actually did not get one of the checks, all of them did not get the second check, I.E. they got the first check but not the second one... Just my opinion

[qbteachmt]

And some got the prepay cards, and discarded them. Some got cards and spent them. Some got direct deposit, not checks, so if you ask, they will correctly state they did not get a check. But they seem to have spent the Money. Funny how that happens.

[PATAX]

@qbteachmt you hit the nail on the head... I had one client tell me that she almost threw out prepaid card because she thought it was some type of scam or fraud...