Taxpayers who did not receive their first or second stimulus payments in 2020, were allowed to claim it as a credit on their 2020 income tax returns if their income (AGI) was below the phaseout thresholds. This credit is called the Recovery Rebate Credit and was claimed by a large number of taxpayers. However, those who claimed the credit can expect to see delays in getting their refunds.
The delay is caused because of the amount of time it taking the IRS to confirm whether the taxpayer claiming the Recovery Rebate Credit previously received the stimulus payment. If the IRS shows a payment was sent out, they are required to issue a ‘trace’ to find out who received the stimulus check.
Prior to COVID, the typical turnaround time for the IRS to run a trace was ten weeks. However, due to the large number of returns being submitted to the IRS reporting this credit, they are dealing with a backlog further delaying this process.
By Todd Decker