Recovery Rebate Credit
With Stimulus Payments (officially called economic impact payments) made to taxpayers in 2020 and early in 2021, many taxpayers have questions about different scenarios. One question is what if a taxpayer died in 2020, should they have received the stimulus payments? What if they got the first one but died before the second one was sent out and they did not receive that one?
The Stimulus payments are dependent on meeting the qualifications. One of those qualifications relates to 2020 income, so the reconciliation of the Stimulus Payments will be reconciled on the 2020 tax return with the Recovery Rebate Credit. If a taxpayer qualified but did not receive a Stimulus Payment or Payments they can still get the payments by filing their 2020 income tax return.
If someone received more than they qualified for the 2020 form 1040 says on lines 17 and 20 of the Recovery Rebate Credit Worksheet that "you don't have to pay back the difference."
But if a taxpayer was entitled to an amount that they did not receive they will now be entitled to receive a credit for it on line 30 of form 1040.
What About Someone Who Died in 2020?
If they meet the qualifications they or their estate can receive the Recovery Rebate Credit if they did not receive the amounts they were entitled to. In addition to the income qualifications even if a person died in 2020 they could have been entitled to the Stimulus Payments and if they did not receive them they can now get a credit on their 2020 tax return, as long as they could not be claimed as a dependent on another person's 2020 return and their return includes a valid social security number.
Get Value From Your CPA
There are a lot of people who prepare tax returns. From experience I know that many won't have conversations with you about your options for filing your tax returns, and this year more than ever you should be talking to your CPA about Stimulus Payments and Charitable Contributions among other things. If you have a complicated tax return and want someone to help you beyond preparing your tax returns then call the CPA Superhero for help you making strategic decisions for your business, yourself, and your family. Email me today to arrange to have a conversation about your situation. My email address is listed below.
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Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.