Will My Recovery Rebate Credit (Stimulus $$) Be Used to Pay Back Taxes?
We have good news – The answer is no! Keep reading to find out more.
The Recovery Rebate Credit allows individuals who did not receive their stimulus payment to potentially claim the missing amount on their 2021 tax return.
Who qualifies for the Recovery Rebate Credit?
The IRS has issued all first, second, and third Economic Impact Payments, so most eligible people have already received their stimulus payments. Those people won’t be eligible to claim a Recovery Rebate Credit.
The Recovery Rebate Credit is for those who either didn’t get their 3rd stimulus check or for those who didn’t get the full amount. It makes it possible for those individuals to claim the missing amount on their 2021 tax return.
The credit will either reduce any tax you owe for 2021 or be included in your tax refund.
You should be eligible to claim the credit if, in 2021, you:
– Were a U.S. citizen or U.S. resident alien
– Can’t be claimed as a dependent on someone else’s tax return
– Have a social security number (SSN) valid for employment issued before the due date of your 2021 tax return.
I owe back taxes. Will the IRS keep my Recovery Rebate Credit?
According to the IRS, the 2021 Recovery Rebate Credit amount will not be applied to past-due federal income tax debts.
Typically, your tax refund is applied to the tax you owe from that year or to outstanding tax debt from other years. This is true even if you have a previously arranged payment agreement with IRS.
However, if you claim a 2021 Recovery Rebate Credit that results in a refund– the refund amount associated with the 2021 Recovery Rebate Credit will not be applied to federal income tax debt.
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