Recovery Rebate vs. Stimulus Check: What Is the Difference?
Your stimulus check was an advance payment of a larger tax credit. Understand the connection to determine if you're owed additional economic relief funds.
The terms “Recovery Rebate Credit” and “stimulus check” have often been used to mean the same thing, causing widespread confusion. While closely related, they are not identical. They represent two different steps in the same federal economic relief effort. Understanding the distinction is important for taxpayers who may not have received the full amount they were entitled to. The stimulus checks were a direct payment, while the Recovery Rebate Credit is a tax credit claimed on a federal income tax return.
The Stimulus Check as an Advance Payment
The stimulus checks, officially named Economic Impact Payments (EIPs), were advance payments of the Recovery Rebate Credit. The federal government issued these payments to get money to the public quickly during the economic disruption caused by the COVID-19 pandemic. The IRS sent these payments automatically based on information from prior tax years instead of waiting for individuals to file their taxes.
There were three distinct rounds of Economic Impact Payments. The first was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, a second round was approved in December 2020, and a third was issued in March 2021.
The amount you received was an estimate based on the most recent data the IRS had on file, such as your 2019 or 2020 tax return. Because these were based on older information, the payment amount might not have reflected your actual situation for the year the payment was intended for. The Recovery Rebate Credit exists to settle the difference between the advance payment you received and the credit amount you were actually eligible for.
Determining Your Eligibility
Eligibility for the Recovery Rebate Credit was based on your circumstances during the specific tax year, not the year the payment was sent. For the first two rounds of payments, reconciled on the 2020 tax return, the credit was up to $1,200 per eligible individual ($2,400 for married couples) and $500 per qualifying child for the first payment. The second payment was up to $600 per eligible individual ($1,200 for married couples) and $600 per qualifying child.
The third payment, reconciled on the 2021 tax return, provided up to $1,400 per eligible person, including all dependents of any age. For all three rounds, eligibility was subject to adjusted gross income (AGI) phase-outs. For instance, for the third payment, the credit began to be reduced for individuals with an AGI over $75,000 and married couples with an AGI over $150,000. A valid Social Security number was also a requirement for eligibility.
To determine if you were owed an additional credit, you need the specific amounts of the Economic Impact Payments you received. The IRS mailed notices confirming these amounts after each payment was issued. The notices sent were:
- Notice 1444 for the first payment
- Notice 1444-B for the second payment
- Notice 1444-C for the third payment
- Letter 6475, which summarized total third-round payments for the 2021 tax return
These documents provide the official figures the IRS has on record for your payments. If you believe you received less than you were entitled to—perhaps because your income was lower in 2020 or 2021, or you had a new child—these letters provide the baseline for calculating any additional credit. If you cannot find these letters, you can find the amounts through your online IRS account.
How to Claim the Recovery Rebate Credit
The only way to claim the remaining amount of the credit is by filing or amending a federal tax return for the specific year before the deadlines expired. For the first and second stimulus payments, the deadline to file a 2020 tax return and claim the credit was May 17, 2024. For the third payment, the deadline to file a 2021 tax return is April 15, 2025.
The process involved completing the Recovery Rebate Credit worksheet found in the instructions for Form 1040 for the relevant year. This worksheet guides you through calculating the total credit amount you were eligible for based on your income, filing status, and number of dependents for that specific year. You would then subtract the amount of the Economic Impact Payments you actually received. The result of this calculation is the amount of your Recovery Rebate Credit, which is entered on your Form 1040.
A common concern is whether you must repay any amount if the stimulus check you received was more than the credit you were eligible for based on your final tax year information. Generally, you do not have to pay back the difference. If your income in 2020 or 2021 was higher than in the year the IRS used to calculate your payment, you are not required to repay the excess amount.