The IRS says that over one million taxpayers may have missed out on the Recovery Rebate Credit (RRC) claimed on their 2021 tax returns. The agency is now taking steps to mail those out. While the amounts may vary, the maximum payment is $1,400 per individual. The estimated amount of payments going out will be about $2.4 billion.
Background
The American Rescue Plan Act of 2021, enacted in early March 2021, provided Economic Impact Payments (EIPs or stimulus payments) of up to $1,400 for eligible individuals or $2,800 for married couples filing jointly, plus $1,400 for each qualifying dependent, including adult dependents.
The credit amount was subject to a phaseout—the amount was reduced if your adjusted gross income was more than $75,000 (or $150,000 for married couples filing jointly). The 2021 RRC amount was entirely reduced to $0 for taxpayers with an adjusted gross income of $80,000 or more ($160,000 or more for married couples filing jointly). That means some individuals couldn’t claim the 2021 RRC even if they received a 2020 stimulus payment. (These EIPs were in addition to payments mailed out in 2020 as part of the CARES Act.)
The payments were advance payments of the 2021 RRC claimed on a 2021 tax return. That means that payments landed in mailboxes and bank accounts in advance of the 2021 tax filing season. The IRS began issuing the third round of EIPs in March 2021 and continued through December 2021.
Taxpayers who did not receive the payments in 2021 (or only received a small payment) could claim the Recovery Rebate Credit on their 2021 federal income tax returns when they filed in 2022.
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