Tax Credit Claiming Eligibility

2021 Recovery Rebate Credit — Topic C: Eligibility for claiming a Recovery Rebate Credit on a 2021 tax return

The eligibility requirements for the 2021 Recovery Rebate Credit are the same as they were for the third Economic Impact Payments, except that the credit eligibility and amount are based on your 2021 tax year information. Third Economic Impact Payments were based on your 2019 or 2020 tax year information.

If you didn’t qualify for third Economic Impact Payment or did not receive the full amount, may be eligible to claim the 2021 Recovery Rebate Credit based on your 2021 tax information. If you received the full amount for the third Economic Impact Payment, you won’t need to include any information about it when you file your 2021 tax return.

You received the full amount of your third Economic Impact Payment if the total amount was:

• $1,400 for an eligible individual who has a valid Social Security number (SSN) ($2,800 for married couples filing a joint return if both spouses have a valid SSN or if one spouse has a valid SSN and one spouse was an active member of the U.S. Armed Forces at any time during the taxable year) plus

• $1,400 for each qualifying dependent who has a valid SSN or Adoption Taxpayer Identification Number (ATIN) issued by the IRS

Generally, if you were a U.S. citizen or U.S. resident alien in 2021, you were not a dependent of another taxpayer, and you either have a valid SSN or claim a dependent who has a valid SSN or ATIN, you are eligible to claim the 2021 Recovery Rebate Credit.  You may also be eligible if you file a joint return with your spouse, you or your spouse were a U.S. citizen or U.S. resident alien in 2021, and either you, your spouse, or both of you, have a valid SSN or you claim a dependent who has a valid SSN or ATIN.

Your credit amount will be reduced by the amount of your third Economic Impact Payment. It is then reduced if the adjusted gross income (AGI) amount on line 11 of your 2021 Form 1040 or Form 1040-SR is more than: 

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower

• $112,500 if filing as head of household or

• $75,000 for all others.

No credit is allowed when AGI is at least the following amount:

• $160,000 if married and filing a joint return or if filing as a qualifying widow or widower

• $120,000 if filing as head of household or

• $80,000 for all others.

For example, a single person with no dependents and an AGI of $77,500 will have a maximum credit of $700 (half the full amount). Married taxpayers who file a joint return that claims two qualifying dependents and an AGI of $155,000 will have a maximum credit $2,800 (again, half the full amount).

You aren’t eligible to claim the 2021 Recovery Rebate Credit if any of the following apply:

• You could be claimed as a dependent on another taxpayer’s 2021 tax return

• You’re a nonresident alien.

• You don’t have a valid SSN issued to you by the due date of your tax return and you don’t claim a dependent who has a valid SSN or ATIN.

Also, estates, trusts, and individuals who died before January 1, 2021 do not qualify for the 2021 Recovery Rebate Credit.

If your income is $73,000 or less, you can file your federal tax return electronically for free through the IRS Free File Program. The fastest way to get your tax refund is to file electronically and have it direct deposited, contactless and free, into your financial account. You can have your refund direct deposited into your bank account, prepaid debit card or mobile app and will need to provide routing and account numbers.

Earned Income Tax Credit (EITC)

Basic Qualifying Rules

To qualify for the EITC, you must:

• Have worked and earned income under $57,414

• Have investment income below $10,000 in the tax year 2021

• Have a valid Social Security number by the due date of your 2021 return (including extensions)

• Be a U.S. citizen or a resident alien all year

• Not file Form 2555 (related to foreign earned income)

Claim the EITC Without a Qualifying Child

You are eligible to claim the EITC without a qualifying child if you meet all the following rules. You (and your spouse if you file a joint tax return) must:

• Meet the EITC basic qualifying rules

• Have your main home in the United States for more than half the tax year

  • The United States includes the 50 states, the District of Columbia and U.S. military bases. It does not include U.S. possessions such as Guam, the Virgin Islands or Puerto Rico

• Not be claimed as a qualifying child on anyone else's tax return

• Be at least age 18 at the end of the tax year (usually Dec. 31)

  • The minimum age to claim the EIC is generally age 19; however, if you are a qualified former foster youth or a qualified homeless youth, you need to be at least age 18.

  • If you are a specified student (other than a qualified former foster youth or a qualified homeless youth), you need to be at least age 24.

• Rule 12—You Cannot Be the Dependent of Another Person If you aren't filing a joint return, you meet this rule if you did not check the box under your name that says "Someone can claim you as a dependent." If you are filing a joint return, you meet this rule if you did not check either box that says "Someone can claim you as a dependent" or "Someone can claim your spouse as a dependent." If you aren't sure whether someone else can claim you as a dependent, get Pub. 501 and read the rules for claiming a dependent. If someone else can claim you as a dependent on his or her return, but doesn't, you still can’t claim the credit.

  • Example 1. In 2021, you were age 25, single, and living at home with your parents. You worked and weren't a student. You earned $7,500. Your parents can’t claim you as a dependent. When you file your return, you do not check the "Someone can claim you as a dependent" checkbox. You meet this rule. You can claim the EIC if you meet all the other requirements.

  • Example 2. The facts are the same as in Example 1, except that you earned $2,000. Your parents can claim you as a dependent but decide not to. You don't meet this rule. You can’t claim the credit because your parents could have claimed you as a dependent.

• Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc.) if all of the following statements are true.

  • 1. You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

  • 2. You were: a. Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly); b. Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly); or c. Permanently and totally disabled, regardless of age.

  • 3. You lived with that person in the United States for more than half of the year.

  • 4. You aren't filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). For more details about the tests to be a qualifying child, see Rule 8. If you are a qualifying child of another taxpayer, you can’t claim the EIC. This is true even if the person for whom you are a qualifying child doesn't claim the EIC or meet all of the rules to claim the EIC. Enter “No” on the dotted line next to line 27a (Form 1040 or 1040-SR).

American Opportunity Tax Credit

Who is an eligible student for AOTC?

To be eligible for AOTC, the student must:

• Be pursuing a degree or other recognized education credential

• Be enrolled at least half time for at least one academic period* beginning in the tax year

• Not have finished the first four years of higher education at the beginning of the tax year

• Not have claimed the AOTC or the former Hope credit for more than four tax years

• Not have a felony drug conviction at the end of the tax year

*Academic Period can be semesters, trimesters, quarters or any other period of study such as a summer school session. The schools determine the academic periods. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.

Claiming the credit

To be eligible to claim the AOTC or the lifetime learning credit (LLC), the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign. Generally, students receive a Form 1098-T Tuition Statement, from their school by January 31. This statement helps you figure your credit. The form will have an amount in box 1 to show the amounts received during the year. But this amount may not be the amount you can claim. See qualified education expenses in Publication 970 , Tax Benefits for Education, for more information on what amount to claim.

Check the Form 1098-T to make sure it is correct. If it isn’t correct or you do not receive the form, contact your school.

To claim AOTC, you must complete the Form 8863 and attach the completed form to your tax return.