As we move into the 2020 tax filing season, I know that there are many questions related to missing or partially received Economic Impact Payments (EIPs), also known as stimulus payments. If you were eligible and did not receive an Economic Impact Payment – or you were issued less than the full amount – then you are encouraged to claim a Recovery Rebate Credit (RRC) by filing your Form 1040 or 1040-SR.
To determine if you are eligible for a Recovery Rebate Credit, CLICK HERE.
It is important to note that while Economic Impact Payments were based-off of your 2018 or 2019 tax filings, the Recovery Rebate Credit is based-off of your 2020 tax filing – eligibility and amount. Moreover, you must file a 2020 tax return to claim the Recovery Rebate Credit, even if you are not required to file taxes because of your age, income, or filing status, also known as a non-filer.
You may find a full list of frequently asked questions related to the Recovery Rebate Credit for non-filers HERE.
To determine the amount of your Recovery Rebate Credit, the Internal Revenue Service (IRS) has provided a Recovery Rebate Credit Worksheet found in the 1040 and 1040-SR instructions – page 59.
You can find the Form 1040 and 1040-SR Instructions HERE.
The quickest way to receive the Recovery Rebate Credit is to file your taxes electronically and have your refund direct deposited into your financial account.
For further information on the Recovery Rebate Credit please visit IRS.gov/RRC.
As taxpayers get ready to file their federal tax returns, most will also be thinking about preparing their state taxes. There’s some good news for filers wanting to save money. Eligible taxpayers can file their federal and, in many cases, their state taxes at no cost.
Taxpayers whose adjusted gross income was $72,000 or less in 2019 can file their 2020 federal taxes for free using IRS Free File. Many of them can also do their state taxes at no charge. They do so through Free File offered by the IRS.
Here’s are a few things for taxpayers to know about filing state tax returns through Free File.
- Most people make less than the $72,000 income limit. So, most people can use Free File.
- Generally, taxpayers must complete their federal tax return before they can begin their state taxes.
- More than 20 states have a state Free File program patterned after the federal partnership. This means many taxpayers are eligible for free federal and free state online tax preparation.
- The states with a Free File program are Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Mississippi, Montana, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, Vermont, Virginia and West Virginia, plus the District of Columbia.
- IRS Free File partners feature online products, some in Spanish. They offer most or some state tax returns for free as well. Some of them may charge so it’s important for taxpayers to explore their free options.
- Free File partners will charge a fee for state tax return preparation unless their offer says upfront the taxpayer can file both federal and state returns for free. Taxpayers who want to use one of the state Free File program products should go to their state tax agency’s Free File page.
- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming don’t have an income tax. So, IRS Free File for a federal return may be the only tax product people in those states need.