Hey there, tax enthusiasts and stimulus seekers! Ever wondered if the 2021 stimulus payment was an advance? Well, wonder no more! We’re diving deep into the world of stimulus payments and uncovering the secrets of this specific round
So, was the 2021 stimulus an advance?
Yes, without a doubt! The 2021 stimulus payment, also referred to as the third Economic Impact Payment (EIP3), was given as a 2021 Recovery Rebate Credit advance. Accordingly, the funds you were given in 2021 were effectively a prepayment for a tax credit that you were able to file for on your 2021 tax return.
But wait, there’s more!
While the 2021 stimulus was an advance, it wasn’t just a simple prepayment. There were some key differences between the two:
- Eligibility: The eligibility requirements for the 2021 stimulus were slightly different than the eligibility requirements for the 2021 Recovery Rebate Credit. For example, some people who were dependents in 2020 but not in 2021 were able to claim the Recovery Rebate Credit on their 2021 tax return, even if they didn’t receive a stimulus payment in 2021.
- Amount: The amount of the 2021 stimulus was based on your 2019 or 2020 tax return, whichever was most recent. However, the amount of the 2021 Recovery Rebate Credit was based on your 2021 income. This means that some people may have received a larger stimulus payment than they were actually entitled to, while others may have received a smaller payment.
- Claiming the credit: If you didn’t receive the full amount of the 2021 stimulus payment that you were entitled to, you could claim the remaining amount as the Recovery Rebate Credit on your 2021 tax return. You could also claim the credit if you didn’t receive any stimulus payments at all.
The following is a brief summary of the primary distinctions between the 2021 Recovery Rebate Credit and the 2021 stimulus:
| Feature | 2021 Stimulus | 2021 Recovery Rebate Credit |
|---|---|---|
| Eligibility | Based on 2019 or 2020 tax return | Based on 2021 income |
| Amount | Based on 2019 or 2020 tax return | Based on 2021 income |
| Claiming the credit | Not necessary if you received the full amount | Necessary if you didn’t receive the full amount or didn’t receive any payments |
So, now you know that the 2021 stimulus was an advance, but what does that mean for you?
Well it means that you need to file your 2021 tax return to claim the Recovery Rebate Credit if you didn’t receive the full amount of the stimulus payment that you were entitled to. You can also claim the credit if you didn’t receive any stimulus payments at all.
To further aid in your understanding of the 2021 stimulus and the 2021 Recovery Rebate Credit, here are some additional resources:
- IRS website: https://www.irs.gov/coronavirus/economic-impact-payments
- CLASP website: https://www.clasp.org/blog/10-things-know-about-2021-stimulus-payments/
- Code for America simplified filing tool: https://www.getctc.org/
Remember, filing your taxes is important, even if you think you don’t owe any money. You may be eligible for valuable tax credits, like the Recovery Rebate Credit, that can save you money. So, don’t delay, file your taxes today!
The Recovery Rebate Credit
The COVID-related Tax Relief Act, signed into law on December 27, 2020, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, authorize the Recovery Rebate Credit. The Recovery Rebate Credit was eligible to be paid as rounds of advance payments during 2020 and 2021. These advanced payments of the Recovery Rebate Credit are referred to as Economic Impact Payments.
The following frequently asked questions (FAQs) are provided by TOP, a collection agency for past-due federal and state debts, in response to questions from debtors about whether and how much of the Recovery Rebate Credit’s advance payments are actually recovered. e. , the Economic Impact Payments) can be offset.
Treasury Offset Program (TOP) and the IRS 2021 Child Tax Credit
IRS 2021 Child Tax Credit and Advanced Child Tax Credit Payments
A taxpayer may claim an advance Child Tax Credit payment on a 2021 tax return during the 2022 tax filing season. These payments are made in advance by the Internal Revenue Service (IRS) and consist of 50% of the estimated Child Tax Credit amount. In some cases, these monthly payments will be made beginning July 15, 2021 and through December 2021.
The American Rescue Plan Act’s authorized Advanced Child Tax Credit payments are not subject to offset through the Treasury Offset Program (TOP) for any reason.
IRS has prepared frequently asked questions (FAQs) to address debtor inquiries regarding this topic. These are available online at https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-g-receiving-advance-child-tax-credit-payments.
No. There will be no reduction (or offset) of advance Child Tax Credit payments for past-due taxes or other outstanding federal or state debts.
However, any leftover Child Tax Credit amounts in your refund could be used to offset tax obligations or other outstanding federal or state debts if you receive a refund when you file your 2021 tax return.
Is stimulus check an advance on 2021 tax refund?
FAQ
Was there a $1,400 stimulus check in 2021?
How much was the 2021 stimulus payment?
Who qualifies for 2021 stimulus check?
How much was the 2021 recovery rebate credit?