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April 15, 2021

TAS Tax Tips: Recovery Rebate Credit and Economic Impact Payment information you might need to know

Recovery Rebate Credit and Economic Impact Payment information you might need to know

Economic Impact Payments (EIPs), also known as stimulus payments, and the related Recovery Rebate Credits (RRCs) are essentially divided into two tax years: 2020 and 2021. The information outlined below is to help you understand which EIPs relate to which RRC and how to find more information about each.

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Tax Year 2020

Two EIPs (EIP1 and EIP2) were issued to eligible taxpayers during 2020 and early 2021. These EIPs were advanced payments of the Recovery Rebate Credit (RRC), a refundable credit, claimed on the 2020 Individual Tax Return.

See also TAS’s Ability to Help With Delayed Refunds Is Limited.

Tax Year 2021

The American Rescue Plan Act of 2021, enacted March 11, 2021, provides a 2021 Recovery Rebate Credit (RRC) which can be claimed on 2021 Individual Income Tax Returns. It also provides for an advanced payment of the RRC in calendar year 2021 through payments that are referred to as Economic Impact Payments (EIP3), similar to what was done in 2020, but with different eligibility criteria and payment amounts. More detailed information about when and how to claim the RRC on the 2021 individual tax forms will be provided prior to the opening of the 2021 filing season.