Cannot enter recovery rebate credit

[amytax8899]

I have never received any economic impact payment. I was told I can claim it when I file tax return. My 2019 income is low so I am qualified for EIP1 and EIP2, but 2020 income is too high. I couldn't find the way to claim EIP1+EIP2. The recovery rebate credit form in TurboTax calculates it based on 2020 income. How can I claim my $1800 credit? Help please!

[DoninGA]

The Recovery Rebate Credit is only based on your 2020 federal tax return, filing status and 2020 AGI.  If your 2020 is to high for the credit then you are not eligible for the credit.

IRS website for the Recovery Rebate Credit - https://www.irs.gov/newsroom/recovery-rebate-credit-topic-b-eligibility

The eligibility requirements are the same for the Recovery Rebate Credit as they were for the Economic Impact Payments except that the credit eligibility and the credit amount are based on your 2020 tax year information.

Your credit amount will be reduced if your adjusted gross income (AGI) is more than: 

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 for eligible individuals filing as a single or as married filing separately.  

Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above.

[amytax8899]

This is not true. In IRS web site,
https://www.irs.gov/newsroom/recovery-rebate-credit-topic-b-eligibility
It says, 'The Economic Impact Payments were based on your 2018 or 2019 tax year information.'

[NCperson]

@amytax8899 - permit me to explain...it is confusing

• these payments are advances on the 2020 tax return. What that means is Congress authorized the IRS to pay some of your 2020 taxes that is why Line 30 is in the 'payment section' of your tax return
• but the problem was that no one would know what their income, filing status and dependents were at the time the law was passed because 2020 hadn't ended yet. 
• So the law stated that the IRS was to use the 2019 tax return (and if that wasn't available 2018) to determine the payments. These are the EIPs.  But this was an ESTIMATE since 2020 wasn't available. this ESTIMATE is what you received as the stimulus payment!
• Now we get to the 2020 tax return and the ACTUAL income, dependents and filing status is available to calculate the ACTUAL amount you are due.
• if that ACTUAL is greater than the ESTIMATE the difference is the Recovery Credit on Line 30.
• if that ESTIMATE is greater than the ACTUAL, then Line 30 is zero and you are not required to return any of the excess.

Since you ACTUAL calculation based on your 2020 tax return is zero you are not eligible for any more beyond what you already received, which in this case is also zero.

please read this over again; it is the way it works.

p.s. yes, the EIP is based on 2018 and 2019 so that is true, but look at how the tax returns for those years fit into the bigger picture and the bullets I wrote out. 

[amy88992000]

NCperson, Thank you very much for your reply. You might be right. However, 'not required to return any of the excess' doesn't make sense.  If someone has similar income as me, but got payment, he can keep the money. It's not fair if this is true.

[NCperson]

I understand it may not be fair but Congress specifically wrote the law that way

and because if that Law , Line 30 can not be negative