2020 Recovery Rebate Credits Are Different Than Expected

The IRS is mailing letters to some taxpayers who claimed the 2020 credit and may be getting a different amount than they expected. Remind your clients that the first and second Economic Impact Payments (EIP) were advance payments of the 2020 credit. Most eligible people already received the first and second payments and should not or do not need to include this information on their 2020 tax return.

Here are some common reasons the IRS corrected the credit:

• The individual was claimed as a dependent on another person's 2020 tax return.
• The individual did not provide a Social Security number valid for employment.
• The qualifying child was age 17 or older on January 1, 2020.
• Math errors relating to calculating adjusted gross income and any EIPs already received.

IRS.gov has a special section - Correcting Recovery Rebate Credit issues after the 2020 tax return is filed – that provides additional information to explain what errors may have occurred. Taxpayers who disagree with the IRS calculation should review their letter as well as the questions and answers for what information they should have available when contacting the IRS.

When processing a 2020 tax return claiming the credit, the IRS determines the eligibility and amount of the taxpayer's credit based on the 2020 tax return information and the amounts of any EIP previously issued. If a taxpayer is eligible, the credit will be reduced by the amount of any EIPs already issued to the taxpayer. For more information, visit the Information Letters about EIPs and the Recovery Rebate Credit FAQs page on IRS.gov.