Top 12 Recovery Rebate Credit 2021 Eligibility FAQs

One thing that government does best is cranking out paperwork, rules, and regulations. There certainly is plenty of complexity when it comes to the many COVID-related economic stimulus activities. For most of these questions and answers there is a lot of detail that you can get in full at the IRS website where these FAQs are publishedi. Some of the items in this list were amended or added in January 2022. Here is an overview of these FAQs, but go to the details at the endnote reference link to help you to get to the details specific to your situation:

  1. What are the eligibility requirements for the credit?

The eligibility requirements for the 2021 credit are the same as the requirements for the 2020 credit, but are based on your 2021 tax return information.

  1. If ineligible for the third payment, am I not eligible for the 2021 credit?

Because the third payment eligibility was based on your 2020 tax return information, changes that are in your 2021 return could make you eligible, especially changes related to:

  • Income change
  • Qualifying dependents
  • No longer a dependent
  • Social Security Number
  1. If I received the third Economic Impact Payment and, based on my 2021 tax return, I’m no longer eligible, do I have to pay that money back?

If you received the third payment and due to your 2021 return you are not eligible for the 2021 credit, you are not required to pay back the previous payment.

  1. Do I need to have a Social Security Number (SSN) to claim the credit?

One eligibility for the credit is that you must have a valid SSN or have a dependent who has one. If either spouse is an active member of the military, only one spouse must have an SSN to receive the full $2,800 credit.

  1. My spouse and I file jointly. My spouse has an SSN and I have an ITIN. Can we claim the credit?

If you file jointly with a spouse and only one of you has a valid SSN, you can claim up to $1,400 for the spouse with the valid SSN and for each qualifying dependent. The same applies as in the previous question if one of the spouses is an active member of the military.

  1. Who is considered a qualifying dependent for the 2021 Recovery Rebate Credit?

The 2021 credit includes up to an additional $1,400 for each qualifying dependent on the 2021 tax return. A qualifying dependent is a dependent who has a valid Social Security Number (SSN) or Adoption Taxpayer Identification Number issued by the IRS.

  1. Is a child born, adopted, or placed into my foster care in 2021 a qualifying dependent for the credit?

The short answer is yes, as they become eligible if placed in the home in 2021 and so shown on the 2021 tax return.

  1. I did not receive the 2020 credit because I was a dependent on someone’s return. I am no longer a dependent, so am I eligible for the 2021 credit?

If no other person claims you as a dependent on their 2021 return, and if you meet other eligibility requirements, you would be eligible for this credit.

  1. Can I claim the credit if I was incarcerated in 2021?

Yes. If other eligibility requirements are met, you will not be denied the 2021 credit.

  1. Are individuals who died in 2021 eligible for the 2021 credit?

An individual who died in 2021 or in 2022 and did not receive the full amount of the third payment may be eligible for the 2021 credit if they meet other eligibility requirements.

  1. I do not have a valid SSN, but I have a dependent who does. May I claim the 2021 credit for that dependent?

Even if you do not have a valid SSN, your dependent who does have an SSN and meets other eligibility requirements is eligible for the 2021 credit.

  1. Can I claim the credit if I was a resident of a U.S. Territory in 2021?

No, you cannot claim the credit from the IRS. Tax authorities in U.S. Territories will provide the credit to those eligible territory residents.

Several of these questions were added in January 2022, and there is a lot more detail for some of the answers at the link below. Work with your tax professionals to get things right on your return.

i Eligibility for Claiming a Recovery Rebate Credit on a 2021 Tax Return – IRS.gov

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