Determining EIP Received
In order to determine whether a client is eligible for the recovery rebate credit (discussed in our post on January 12, 2021), practitioners must know the amount of economic impact payments (EIPs) received by the client in/around April 2020 and again beginning in January 2021.
IRS Notice 1444 shows the amount of the first EIP and Notice 1444-B shows the amount of the second EIP. If a client retained these notices, then this matter is very simple. However, since many clients did not retain these notices, practitioners must use some other method to determine the amount of the EIPs received by the client. Such other methods include asking the client to look for the amount of direct deposits or checks deposited, or the practitioner can compute the amount of EIP that the IRS should have sent based on the client’s prior-year return(s).
The IRS has indicated that taxpayers who create an individual online account can now view the amount of EIPs sent to them by the IRS. Such an account can be created by the taxpayer, not by practitioners. The IRS has indicated that it takes about 15 minutes to create such an account, due to the identity verification required. Information about such accounts is available at: https://www.irs.gov/payments/view-your-tax-account.
Note: The IRS has indicated in its frequently asked questions that it will not compute the recovery rebate credit for taxpayers who do not put anything on line 30 of Form 1040, but it will correct this credit if it is computed incorrectly. The IRS frequently asked questions are available at: https://www.irs.gov/coronavirus/economic-impact-payment-information-center.