Now that the Internal Revenue Service has mailed Letters 6475 to all the taxpayers who got third-round Economic Impact Payments (EIPs), there’s only one door left open to those who didn’t get the full benefit of the stimulus payments.
People have to claim any remaining third-round EIP amounts on their 2021 income tax return using the Recovery Rebate Credit.
More than 175 million third-round payments totaling over $400 billion were issued by the IRS as of Dec. 31, 2021. Since EIPs are no longer being issued, filing a 2021 income tax return claiming the Recovery Rebate Credit is the only remaining option for taxpayers.
The three EIPs were advance payments of the Recovery Rebate Credit. Most taxpayers got the full amount of the credit through the EIPs and don’t need include any information about the payments in their 2021 return.
The same goes for those taxpayers who received what’s called “plus-up” payments. These were additional payments from the IRS to those who initially got a third-round EIP based on information from their 2019 tax return, but were eligible later for a larger amount, based on their 2020 return.
How do taxpayers know the EIP amount they received?
The best way to know what Economic Impact Payments a taxpayer has gotten is to access their IRS Online Account, where the amounts were posted in the Tax Records page. In the case of married spouses filing jointly, each spouse will have to log into their own Online Account to see their part of the total payment—or check out their personal Letter 6475.
More information can be found in the Frequently Asked Questions for Topic G: Finding the Third Economic Impact Payment Amount to Calculate the 2021 Recovery Rebate Credit.
Taxpayers should check their records first
The most efficient way to check up on possible Economic Impact Payments is to simply check bank account records—especially those from early spring and summer of 2021—to see if the payment was actually received and deposited.
If a taxpayer’s IRS Online Account shows an EIP was issued (any payment greater than $0 qualifies). or if the taxpayer has a Notice 1444-C or Letter 6475 saying a payment was issued to them, but the payment was never received, they should contact the IRS as soon as possible to see if a payment trace is needed.
Note that if a payment was issued by the IRS but returned, the amount shown in the Online Account may be less that the amount in their Letter 6475. A payment trace should not be requested to find if a taxpayer was eligible for a payment, or to confirm the amount of payment they should have gotten.
If a trace is requested, there’s no need to wait until it’s complete to file a 2021 tax return. Whether completing the Recovery Rebate Credit Worksheet in the printed forms or answering EIP questions in tax software, taxpayers have two options to move forward.
They can opt to use the amount printed in their Letter 6475 or the EIP amount found in their Online Account to figure their Recovery Rebate Credit on line 30; or, the taxpayer can merely use the amount of EIP they believe they got to calculate the line 30 amount.
Either way, if the trace reveals the taxpayer in fact did not receive the Economic Impact Payment, the IRS will then automatically adjust the amount of Recovery Rebate Credit on the tax return and issue a refund as needed.
Mistake? No amended return necessary
There’s good news for taxpayers who make a mistake in figuring their 2021 Recovery Rebate Credit on line 30: the IRS says they don’t have to file an amended return to fix the error. Instead, the IRS will correct the amount and send a notice letting the taxpayer know what’s been done.
However, for those who did not claim the Recovery Rebate Credit on their 2021 returns, if the IRS shows they weren’t issued an Economic Impact Payment, they’ll have to file a Form 1040-X, Amended U.S. Individual Income Tax Return, to make their claim for the stimulus payment.
Those on the fence on whether they need to file an amended return or not can use the Interactive Tax Assistant, Should I File an Amended Return? to determine the best way forward.
Taxpayers who filed their 2021 return electronically may be able to file their amended return electronically as well. Otherwise, if they filed a paper return, they’ll have to complete the paper Form 1040-X and follow the instructions for preparation and mailing.
For more information, see the Recovery Rebate Credit page and the 2021 Recovery Rebate Credit Frequently Asked Questions on the IRS website.