Since the beginning of April, the IRS has released information about plus-up payments and Recovery Rebate Credits, two ways to get additional money from the three stimulus bills passed since the COVID-19 pandemic began.
Both the plus-up payment and the Recovery Rebate Credit might get you more stimulus money, depending on your 2020 tax return. But there are some important differences between them, including how much money you might get and how to apply for it.
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The plus-up payments, detailed in an IRS news release April 1 (opens in new tab), are supplements to the third stimulus check. That's the $1,400 payment made possible by the American Rescue Plan Act of 2021, aka the Biden stimulus bill.
If you qualify for a plus-up payment, you will receive an extra check as part of the weekly rounds of stimulus payments that the IRS has been making every Wednesday.
The Recovery Rebate Credit, as explained in an IRS news release April 5 (opens in new tab), is a tax credit related to the first ($1,200) and second ($600) stimulus checks, which were created by the CARES Act of 2020 and the Consolidated Appropriations Act of 2020. If you qualify for the Recovery Rebate Credit, your 2020 taxes will be reduced and you may receive the credit as part of a tax refund.
Both the plus-up payment and the rebate credit will be determined by your 2020 tax return. But while the plus-up payment will come to you automatically once your return is processed by the IRS, the rebate credit is something you have to claim on your 2020 return. You won't get it otherwise.
Who qualifies for the plus-up payment or the Recovery Rebate Credit?
In both cases, whether you qualify for a payment depends on how much you received from any of the three stimulus checks and whether your tax situation changed from 2019 (or 2018) to 2020.
To qualify for either the plus-up payment or the Recovery Rebate Credit, you have to:
- Have not received the full amount of any of the three stimulus checks AND
- Have had a major change in your tax status in 2020
That change in tax status could be caused by several factors, including:
- A drop in income from 2019 (or 2018) to 2020
- The birth of a child, or the addition of another dependent
- Marriage or another reason to shift to filing joint returns
Anyone who received the full amounts of all three stimulus payments, including payments for dependents, will not qualify for either the plus-up payments or the Recovery Rebate Credit.
The first stimulus check gave $1,200 to every qualifying individual, plus $500 for each dependent under age 17. The second gave $600 to qualifying individuals plus $600 for each dependent under age 17. The third check was more generous, giving $1,400 to every qualifying individual plus $1,400 for each dependent of any age.
So a married couple of with three kids under 17 at home would have received a maximum of $3,700 in the first round, $3,000 in the second round and $7,000 in the third. If this resembles your situation, you're done and can't get any more from these stimulus checks.
But if you got less than the full amount of any of these three rounds of payments, and your tax situation changed in 2020, then you may be eligible for additional money. Changes to your tax situation could include a drop in income from 2019 to 2020, the addition of a child or dependent, or a change in marital status.
For example, if you're an individual who made more than $99,000 in 2019 but less than $75,000 in 2020, you might suddenly find yourself eligible for the full amount of all three stimulus checks, a total of $3,200, plus any money that would be due for dependents.
That's because your 2019 (or 2018) tax return would have made you ineligible for any stimulus money under the first two stimulus bills. If the IRS also used your 2019 return to calculate the amount you deserved under the third stimulus bill, then you wouldn't have received anything from that either.
How do you get the plus-up payment or the Recovery Rebate Credit?
To get either the plus-up payment or the Recovery Rebate Credit, you've got to file your 2020 tax return. It's due May 17.
After that, you won't need to do anything to get the plus-up payment. Once your return is processed — the IRS has to do so by August 16 — then your plus-up payment will go out in the next round of direct deposits and check mailings of stimulus payments.
But you will need to do some extra work to get the Recovery Rebate Credit. Specifically, you've got to fill out this IRS worksheet (opens in new tab) and then enter the resulting amount on line 30 of your 1040 or 1040-SR tax return.
That will result in a credit that offsets the taxes you owe or increases the amount of your tax refund. If you do get a payment from the Recovery Rebate Credit, it will be as part of your 2020 tax refund.
The IRS warns that many people may not receive the Recovery Rebate Credit, or get smaller credits than they expect, due to errors in calculating the amount of the credit. If you've already filed your 2020 tax return but think you might be eligible for the Recovery Rebate Credit, you'll have to file an amended tax return (opens in new tab).
How much will I get from the plus-up payment or the Recovery Rebate Credit?
How much you get from either the plus-up payment or the Recovery Rebate Credit depends on how much you got from the three stimulus checks and how much your tax situation has changed.
An extreme example would be the theoretical individual mentioned above, whose income dropped from more than $99,000 in 2019 to less than $75,000 in 2020, and would receive $3,200. Married couples whose incomes went from more than $198,000 to less than $150,000 would see the same thing, and would get $6,400. Dependents would add even more.
Most people who qualify for the plus-up payment or the Recovery Rebate Credit will probably get a lot less than those amounts. But it can't hurt to try.