The third round of Economic Impact Payments was authorized by the American Rescue Plan Act of 2021 as an advance payment of the tax year 2021 Recovery Rebate Credit. If a taxpayer did not receive an Economic Impact Payments (EIP) in 2021, or received a payment for less than they were entitled to, they may be able to claim a credit on their 2021 tax return.
Generally, taxpayers are eligible to claim the Recovery Rebate Credit if they:
- were a U.S. citizen or U.S. resident alien in 2021,
- are not a dependent of another taxpayer for tax year 2021, and
- have a social security number valid for employment that is issued before the due date of their 2021 tax return (including extensions).
The third payment includes $1,400 for each taxpayer and an additional $1,400 for each dependent with a valid SSN that was claimed on the 2020 (or 2019) tax return. If the taxpayer does not have a valid SSN, but their dependent does, they qualify to receive the payment for the dependent.
The credit has an AGI phaseout limitation:
Filing Status |
AGI phaseout begins |
Maximum AGI |
| MFJ / Qualifying Widow(er) | $150,000 | $160,000 |
| Head of Household | $112,000 | $120,000 |
| Single / MFS | $75,000 | $80,000 |
How to figure the credit in the desktop program
When you create a new tax return in TaxSlayer Pro in 2021, you will be prompted with the following question:
Answer Yes if your client did not receive an EIP in 2021, or if they received an amount less than they qualified for. You can also answer Yes to go through the process and produce the worksheet to see how the credit is calculating.
After answering Yes, enter the amount of the economic impact payment that the taxpayer received in 2021. The taxpayer should have received Notice 1444-C from the IRS indicating the amount of the payment.
If you need to return to the the Recovery Rebate Credit Worksheet, from the Main Menu of the tax return (Form 1040) select:
- Payments, Estimates & EIC
- Recovery Rebate Credit
Diagnostic Warning
A return that includes the Recovery Rebate Credit will display the following diagnostic warning:
This return contains a Recovery Rebate Credit in the amount of $xxxx. Please verify that the amount of Economic Stimulus Payment entered is accurate to avoid refund delays or offsets.
This diagnostic warning is not indicative of a problem; rather, it's there to keep you on your toes to ensure you've completed the menu accurately.
Note: This is a guide to the Recovery Rebate Credit in the TaxSlayer Pro program. It is not intended as tax advice.
Additional Information: