This year’s tax season officially began in the United States on Monday, January 24th, when the Internal Revenue Service (IRS) began collecting and processing returns for the tax year 2021.
Thanks to all of the stimulus checks that were distributed last year, there are a flood of credits and other crucial details to be aware of once again. The Child Tax Credit and the Recovery Rebate Credit are two of the most essential, as per BGR.
What to know about the new tax rebate?
We’re referring to the third stimulus check, which is typical $1,400. Not the six Child Tax Credit stimulus checks from the previous year. The amount of credit you are qualified for will be reduced if you receive a third stimulus check.
To claim the 2021 Recovery Rebate Credit and avoid a processing wait that might hinder a tax return, you’ll need the whole amount of your third stimulus check, as well as any plus-up payments.
File your 2021 tax return online and the tax software will assist you in calculating your 2021 Recovery Rebate Credit, according to the IRS. Your Recovery Rebate Credit will be applied to any taxes you owe in 2021 or will be included in your tax refund, and will be transferred directly into your bank account.
Check the IRS website
According to Accounting Today, the IRS expanded on the Recovery Rebate Credit, adding further specifics to its Frequently Asked Questions page regarding calculating the credit using the initial Economic Impact Payment amounts.
The IRS has published a new FAQ page that goes into further detail on the Recovery Rebate Credit. Taxpayers who did not qualify for or receive the full amount of the third Economic Impact Payment may be eligible to claim the 2021 Recovery Rebate Credit based on information from the 2021 tax year.
The majority of those who are eligible have already received their EIPs and will not include any information regarding their payment when filing. Those who are behind on their stimulus payments, on the other hand, should study the material on the Recovery Rebate Credit website to see whether they are eligible and if they need to file a Recovery Rebate Credit claim for the tax year 2021.
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