Question

2021 Recovery Rebate Credit Worksheet is Using Incorrect Adjusted Gross Income

Forum|Forum|4 years ago
January 14, 2022
1 reply
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Hello.

For the 2021 tax year, the Recovery Rebate Worksheet is using the incorrect adjusted gross income to determine if I'm eligible for the credit. The rebate eligibility should be based on my 2021 adjusted gross income, but it's using my 2021 adjusted gross income. The form does not let me override the amount and therefore the form is wrong.

rjs

Employee

@brianmoss wrote:

The rebate eligibility should be based on my 2021 adjusted gross income, but it's using my 2021 adjusted gross income.

Please clarify the problem. You said it's using what it should be using.

Did you mean to say that it should be based on your 2020 AGI? That's not correct. The Recovery Rebate Credit on your 2021 tax return is based on your 2021 AGI. The advance payment ("stimulus" payment) was based on your 2020 AGI because your 2021 AGI was not known yet. But the credit on your tax return is based on your 2021 AGI.

X

xmasbaby0

Employee

When the IRS sent out those EIP payments they were sending them out in a hurry. So in many cases if they had processed a 2020 return and the person was eligible based on their 2020 AGI, the stimulus was issued. And even if their 2021 AGI turned out to be higher, they do not have to pay it back. BUT-----if you did not get it ahead of time, the credit is really based on your 2021 AGI. If your 2021 AGI is too high to meet the criteria, you either get a phased out amount, or maybe nothing for the 3rd stimulus.

Who’s eligible for the third Economic Impact Payment? (updated March 30, 2021)

Generally, if you’re a U.S. citizen or U.S. resident alien, you are eligible for $1,400 ($2,800 for a joint return), plus $1,400 for each qualifying dependent, if you (and your spouse if filing a joint return) aren’t a dependent of another taxpayer on a 2020 tax return, have a valid Social Security number (SSN) (see exception when married filing jointly and exception for qualified dependents) and your adjusted gross income (AGI) does not exceed:

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.

Payments will be phased out – or reduced -- above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:

$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

For example, a single person with no dependents and an AGI of $77,500 will normally get a $700 payment (half the full amount). A married couple with two dependents and an AGI of $155,000 will generally get a payment of $2,800 (again, half the full amount). Filers with AGI of at least $80,000 (single and married filing separately), $120,000 (head of household) and $160,000 (married filing joint and surviving spouse) will get no payment based on the law.

You aren’t eligible for a payment if any of the following apply:

You could be claimed as a dependent on another taxpayer’s 2020 tax return
You’re a nonresident alien.
You don’t have a valid SSN issued to you by the due date of your tax return (including an extension to October 15 if you request it).

Also, payments will not be made to estates or trusts or for individuals who died before January 1, 2021.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**