The May 17, 2024 deadline is fast approaching for taxpayers who have not yet filed a 2020 tax return to claim a refund of withholdings, estimated taxes or their 2020 Recovery Rebate Credit. The IRS estimates that almost 940,000 of the nation’s taxpayers have unclaimed refunds totaling more than $1 billion for tax year 2020 and encourages eligible non-filers in 2020 to claim their Recovery Rebate Credit before the May 17 deadline.
What is a Recovery Rebate Credit
During the COVID pandemic, the government issued stimulus checks (Economic Impact Payments) to tens of millions of taxpayers to minimize the negative economic impact of the pandemic. In 2020 and 2021, the IRS issued three rounds of payments: two payments for 2020 and one payment for 2021. But there are concerns that not every eligible person received their payments. If you are eligible for these payments but did not receive them, you can still file your 2020 or 2021 return and request the missing payments as a Recovery Rebate Credit. The Economic Impact Payments were advance payments of the Recovery Rebate Credit, a refundable credit that taxpayers could claim on their returns for tax years 2020 and/or 2021 if they did not receive the full amount of the Economic Impact Payments for which they were eligible. If you are entitled to receive the stimulus checks but did not receive one or more payments, you still have an opportunity to claim the payments on your 2020 or 2021 returns. However, you must file a tax return to claim and receive a Recovery Rebate Credit by the applicable deadline.
You don’t need to claim the Recovery Rebate Credit on your 2020 tax return if you were issued the full amount of that credit through the first and second round of Economic Impact Payments. You were issued the full amount of the 2020 Recovery Rebate Credit if:
- your first Economic Impact Payment was $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child you had in 2020; and
- your second Economic Impact Payment was $600 ($1,200 if married filing jointly) plus $600 for each qualifying child you had in 2020.
Taxpayers claiming a 2020 Recovery Rebate Credit need to know whether they received their first and second Economic Impact Payments and if so, in what amounts to correctly calculate the 2020 credit. You can find these amounts by accessing either your individual online account, Notice 1444, Your Economic Impact Payment, or your 2020 account transcript. Spouses filing a joint return for 2020 need to know the payment amounts for both spouses. The Rebate Credit Worksheet in the 2020 Form 1040 and Form 1040-SR instructions can help determine if you are eligible for the credit. Once you determine your eligibility and confirm that you did not receive one or more of the payments (or the full amount of the payment for which you were eligible) you will need to file a 2020 tax return.
Taxpayers claiming the 2020 or 2021 Recovery Rebate Credit on their Form 1040, Individual Income Tax Return, should be aware that the IRS has the authority to offset their refund and apply it to certain federal and state liabilities. Taxpayers have until April 15, 2025 to claim their 2021 Recovery Rebate Credit. The Taxpayer Advocate Service can assist taxpayers experiencing an economic hardship who need their refund to relieve the hardship by preventing the IRS from offsetting all or a portion of the refund against an outstanding federal tax liability. To learn more, see my previous blog: How to Prevent a Refund Offset if You Are Experiencing Economic Hardship.
Conclusion
The clock is ticking to receive your 2020 income tax refund or Recovery Rebate Credit. If you did not file your Form 1040, Individual Income Tax Return, or did not receive your stimulus payments you can contact a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site for assistance. The IRS encourages VITA/TCE sites to assist taxpayers with filing prior year returns but not all locations offer this service, so you may be referred to another location. VITA/TCE sites can use tax preparation software to assist with preparing your 2020 return but will not be able to electronically file it and must file the return on paper. Act now! 2020 returns filed on paper must be postmarked by May 17, 2024 to be considered timely.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.