Recovery Rebate Credit

[dan0616]

My client is MFJ for past 25 years.  Year 2018 AGI = $ 240000; YEAR 2019 AGI = $ 113000 AND I;M WORKING ON 2020 AND AGI LOOKS LIKE $ 234000 AND 2020 HAS NOT YET BEEN FILED.

CLIENT RECEIVED THE SECOND ROUND $ 1200 RECENTLY BUT DID NOT RECEIVED THE FIRST ROUND $ 2400 FROM APPROXIMATELY LAST APRIL.

A READING OF THE IRS RULES/GUIDANCE INDICATES THE TAXPAYERS SHOULD GET THE $ 2400 BUT THE 2020 RECOVERY REBATE CREDIT CALCULATION IN PROSERIES SHOWS $ 0 FOR THE REBATE BECAUSE OF THE $ 234000 AGI AND THE PHASE OUT.   ARE THE TAXPAYERS OUT OF LUCK?  SHOULD THEY HOLD OFF FILING YEAR 2020, AWAITING THE IRS TO SEND THE $ 2400?

ANY SUGGESTIONS/RECOMMENDATIONS ARE GREATLY APPRECIATED!!!

THIS IS DRIVING ME NUTS!!!!!!!!!!!

THANKS VERYONE!!

DAN

[qbteachmt]

This is Moot: "CLIENT RECEIVED THE SECOND ROUND $ 1200 RECENTLY BUT DID NOT RECEIVED THE FIRST ROUND $ 2400 FROM APPROXIMATELY LAST APRIL."

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.

If the person is not a dependent in 2020, then they would be entitled to the payment/credit as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

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.

[dkh]

You say your client did not receive the first EIP was it because the 2019 return was not filed when those payments were sent so IRS used the 2018 AGI to determine eligibility?        Waiting to file the 2020 so they will receive the $2400 for the EIP#1 is pointless...that shipped has sailed.   

If this third EIP is handled on the 2021 return as the EIP#1 & #2 is being handled on the 2020 return, where as a client does not have return any payment the exceeds what they are eligible for....waiting to file the 2020 until the EIP#3 of $2800 has been processed would be to your clients benefit.   

[qbteachmt]

"AND I;M WORKING ON 2020 AND AGI LOOKS LIKE $ 234000 AND 2020 HAS NOT YET BEEN FILED."

That income level means they don't qualify for 2020 Actuals or for 2021 Advance.

That's why you should read the eligibility and qualification topics for yourself = to learn what applies for your clients' expectations.