The Oct. 15 tax extension deadline is quickly approaching, and it's one of the last opportunities to receive the two 2020 economic impact payments.
Taxpayers who didn't receive the first two stimulus checks, or who received less than they should have, can claim a so-called Recovery Rebate Credit on their 2020 returns.
While Oct. 15 is the last date to file in a "timely" manner, technically the IRS gives taxpayers up to three years from the due date of the return to file and receive a refund, says Mark Steber, chief tax information officer at Jackson Hewitt.
"This means you can file your return and receive your Recovery Rebate Credit through April 15, 2024," Steber says.
While taxpayers missing the third stimulus check cannot claim it on their 2020 return because it was sent out in 2021, the IRS says it will disburse it automatically using 2020 information once taxpayers file. If this does not happen, or an incorrect amount is sent, taxpayers can then claim it on their 2021 tax return, an IRS spokesperson told CNBC Make It.
That said, the agency is encouraging taxpayers to file their 2020 returns before the end of 2021.
How to claim the credit
The first stimulus check was worth up to $1,200 per eligible individual plus $500 per eligible child, while the second was worth up to $600 per eligible individual and dependent. Generally, individuals with adjusted gross income up to $75,000, heads of households earning up to $112,500 and married couples filing jointly earning up to $150,000 qualified for full payments. The amount of the checks then phased out above those income levels.
The value of the checks were based on taxpayers' 2019 returns at first to streamline sending them out. But those who had a child or lost income in 2020 relative to 2019 likely qualified for more money than they received based on their 2019 tax return.
Eligible individuals can claim the credit on line 30 of Form 1040 or Form 1040-SR. Tax software should allow users to claim the stimulus check funds, but you will need to know how much you already received from the IRS. This can be found via bank statements for the deposit amount, or via your IRS online account.
Those eligible for more will not receive a separate check; it will be part of their tax refund, or will reduce the amount of tax owed to the IRS.
Additionally, low-income individuals who don't normally file were also eligible for the stimulus checks, but needed to give their bank account information or address to the IRS in order to receive them. To do so now, you can file a simplified return or use the IRS's Child Tax Credit Non-filer Sign-up tool (the name is confusing, but you do not need to have a child to use this tool).
In addition to stimulus payments, 2020 returns are being used to calculate the value of the monthly child tax credit payments for eligible parents or guardians.
Finally, some taxpayers were granted extensions beyond Oct. 15, including those in federally-declared disaster areas and members of the military serving in combat zones.
Sign up now: Get smarter about your money and career with our weekly newsletter
Don't miss: 'I was depending on it': A week later, parents still haven't received September child tax credit
Source: Read Full Article