Recovery rebate credits are a great way to catch up on a stimulus payment you may have missed during last year, or if you simply did not get the full amount. If you did not receive the full amount of the third stimulus payment, you could be eligible to claim the 2021 recovery rebate credit, but you will need to file a tax return for 2021 – even if you do not ordinarily file taxes.
The IRS states that your recovery rebate credit will reduce any tax you owe for 2021 or be included in your tax refund. This means you will either shave off the top from a tax bill, or simply receive more in cash when refund time rolls along.
The 2021 recovery rebate credit is a bit different from the one issued in 2020. The third stimulus and the plus-up payments were technically advance payments of the 2021 rebate credit claimed on a 2021 tax return. The payment amounts are different than in 2020, as the maximum credit is $1,400 per person including all qualifying dependents claimed on a tax return, as this was the amount of the payment in 2021. In 2020, the first stimulus check was $1,200 plus $500 for each qualifying child you had in 2020 and the second was $600 plus $600 for each qualifying child you had in 2020.
Eligible dependents have also increased. Eligible claimants will receive up to $1,400 for each qualifying dependent claimed on their return – even including older relatives like college students, adults with disabilities, parents and grandparents.
You will not be able to claim any credit with an adjusted gross income of $80,000 or more filing single or $160,000 or more if filing jointly.
If you file taxes electronically, the tax preparation software and/or your preparer will be able to automatically calculate the credit for you. If you do not normally file a tax return, meaning you do not make enough money to file taxes, you will be able to use the Free File program through the IRS. The Free File program allows you to electronically file your taxes for free and even offers free tax preparation through its partner sites. Anyone with an adjusted gross income under $73,000 can use the service, which can be accessed here.
This article originally appeared on GOBankingRates.com: Stimulus Update: What Is a 2021 Recovery Rebate Credit and How Can You Claim One?