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it's 2021 and the second round of stimulus checks are being sent out now with all this talk about the second stimulus payment also known as the economic impact payment many people who are eligible didn't receive their stimulus payment or received less than they were expecting at the time of this recording the irs is still sending out the second stimulus check of 600 but if you didn't receive either of the economic impact payments you could still be eligible to claim it on your 2020 tax returns in this video i'll go over the 2020 stimulus check eligibility reasons you may not have received it or received less than you were expecting and go over how you can claim for the recovery rebate credit on your 2020 income tax returns if you didn't receive either of the economic impact payments or you received less than you were expecting welcome to cpa explains please note everything on this channel is for informational and entertainment purposes only please contact your tax attorney or cpa for your specific tax questions in 2020 there were two economic impact payments the first one paid twelve hundred dollars to eligible individuals and five hundred dollars per dependent the second economic impact payment started being paid out in the beginning of 2021 and at the time of this recording is still being paid out the irs plans to have the second payment out by the middle of january but if you didn't receive either one of the payments or both of the payments or received less than you were expecting you are able to take the credit on your 2020 tax returns in the form of the recovery rebate credit the recovery rebate credit is treated like a refundable credit this means that this credit will reduce the amount of tax you owe in 2020 giving you a dollar for dollar reduction of your tax liability it's also refundable similar to the earned income tax credit or the child tax credit this means if the value of the credit goes beyond the tax liability it can result in a refund check so for example if your 2020 tax liability was twelve hundred dollars and you were due twelve hundred dollars from a stimulus payment but didn't receive it you'll be able to claim the twelve hundred dollar recovery rebate credit to offset your tax liability now if your tax liability was only five hundred dollars you would offset the 500 liability and received a difference as a refund so in this example you would receive 700 in the form of a tax refund before we go into an example of how to calculate our eligibility and claim a tax credit let's look at some reasons you may not have received a payment even if you are eligible one reason could be that your adjusted gross income in prior years made you ineligible for the payment but you qualify for the tax credit with your 2020 adjusted gross income the economic impact payment eligibility was determined using the latest tax return the irs had on file at the time the payment was made if you had not yet filed your 2019 tax return at the time of the stimulus payments the irs likely used your adjusted gross income using your 2018 tax return the recovery of rebate credit is determined using your 2020 adjusted gross income so if you were not eligible using your 2018 or 2019 adjusted gross income because you made more income in previous years you may still be eligible to claim the recovery rebate credit using your 2020 adjusted gross income this is especially true for anyone that was impacted during these times and had to go on unemployment or any business owner that was impacted and lost income during 2020. other reasons why you may not have received the payment could be that you were claimed as a dependent by someone else in previous years or your bank account information may not have been up to date in the irs system whatever the reason if you are eligible for the recovery credit for 2020 and didn't receive the economic impact payment you may be able to claim it on your 2020 tax return if this is the case we'll go over what you need to do to claim it as a tax credit on your tax return when filing the 2020 form 1040 on line 30 you'll see the recovery rebate credit line item this is where you'll calculate the amount that you are due as a refundable credit to calculate the credit we'll need notice 1444. anyone who received a stimulus check payment should have also received a letter in the mail notice 1444 stating the exact amount you received which will be used on this worksheet if you didn't receive any payment you may have not received the notice 1444 either but if you did receive a payment and don't have your notice 1444 available you can visit irs.gov account to find the amount of your economic impact payment now let's go over an example of a single individual who made 90 000 of income in 2020 making them eligible for the recovery rebate credit but someone who didn't receive an economic impact payment in the form 1040 instructions the irs provides us with a worksheet which helps us walk through the eligibility for how much we should have received as an economic impact payment so we can claim it on our tax returns form 1040. lines one through four just confirmed that you weren't a dependent and that you have a valid social security number on line five we're gonna put in the maximum amount of the first economic impact payment this would be twelve hundred dollars for single or head of household individuals or twenty four hundred for married filing jointly so for our purposes we're going to put in twelve hundred dollars on line five as part of the first economic impact payment individuals with dependents would receive five hundred dollars per dependent on line six we're going to multiply 500 by the number of dependents that we can claim on our form 1040. in our example this individual doesn't have any dependents so we're gonna leave this a zero line seven is asking us to add the amounts on lines five and six this would be the maximum amount of the economic impact payment not taking into account any phase outs due to the income thresholds line eight and nine of this worksheet are asking us about the second economic impact payment so on line eight we would put in the maximum amount that we would have received on the economic impact payment if we had received it which would be six hundred dollars the second stimulus payment allowed for six hundred dollars per dependent so on line nine we're going to multiply six hundred dollars by the number of dependents that we can claim on our form 1040. on line 10 we're just gonna add lines eight and nine to get the maximum amount of the second economic impact payment now that we've calculated the maximum amount of both of the economic impact payments we'll need to find our adjusted gross income from our form 1040 to reduce the payment by the income thresholds so in line 11 of this worksheet you'll put in the adjusted gross income which is found on line 11 of form 1040 or 1040sr in our example our individual had an adjusted gross income of 90 000 on line 12 we're just going to put in the amount shown below based on our filing status so in our example we're going to use the 75 000 which starts to phase out of the economic impact payment for any single individual making over 75 000 if your adjusted gross income is more than the amount shown on line 12 you'll subtract line 12 from 11. so in our example 90 000 minus 75 000 we're gonna have fifteen thousand dollar difference on line fourteen we're going to multiply that fifteen thousand by five percent this is going to give us the amount that we'll have to reduce to get our economic impact payment for anyone making over 75 000 so in line 15 we're actually going to reduce what we calculated as our first economic impact payment by that 750 dollars we just calculated in this example this individual is eligible for 450 dollars of credit on their 2020 tax return on line 16 we're going to put in how much we may have received on the first economic impact payment now in our example we didn't receive a payment but if you did you might want to refer to notice 1444 or your tax account information on the irs website for the amount to enter here if you received any amount from the first economic impact payment and it was less than the eligible amount that's calculated on this worksheet you're able to take that difference and claim it as a credit now if you got more than the eligible amount you're in luck and you don't have to pay back the difference now that was the credit for the first economic impact payment for the latest economic impact payment we're going to take that same process and on line 18 we're going to subtract line 14 which is the amount that we calculated as our threshold income amount minus line 10 which is the maximum amount we calculated as the second economic impact payment now here we'll see that we are over the threshold for the second economic impact payment so we're going to put in 0 on line 18. line 19 will be 0 2 since we didn't receive any payment and line 20 will be zero and finally on line 21 we're going to add lines 17 and line 20 which would be our recovery rebate credits for both of the payments and this is the amount that we can claim on our line 30 of our form 1040 or 1040sr to claim the credit so that completes this worksheet and this worksheet is essentially just walking you through the eligibility and the threshold income amounts for the economic impact payments the difference of what you're eligible for using your 2020 adjusted gross income minus what you were paid is the difference that you can claim as a credit on your 2020 tax return to actually claim this credit you'll have to put this amount on line 30 of form 1040 when you're filing your tax returns this will be a dollar for dollar credit of your tax liability and can result in a refund if it goes above your tax liability one of the main differences that individuals will face is that the irs used 2018 and 2019 adjusted gross income amounts for the economic impact payments but the recovery rebate credit is using 2020 adjusted gross income so this means that many individuals who may not have been eligible using 2018 or 2019 adjusted gross income could be eligible for the credit if they may have lost their job or lost income due to the pandemic so that's it for this video hope that was helpful let me know if you have any questions in the comment section below and let me know if you received your stimulus check or if you have to take the credit when you're filing your tax return please remember nothing in this video is tax or financial advice please talk to your cpa or tax attorney for details about your tax situation if you like this video and you found it helpful please like comment subscribe and share with your friends thank you