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The third Economic Impact Payment (EIP3) is part of the American Rescue Plan Act enacted on March 11, 2021 and is a tax credit against the 2021 income tax. If a taxpayer didn't receive these full payments in advance, they may be eligible to claim them on their 2021 individual returns using the Recovery Rebate Credit Worksheet.

Calculate the Recovery Rebate Worksheet

By default, the worksheet and credit will always calculate. Critical diagnostics will print when a recovery rebate credit is calculated but no EIP is entered. You can change this default to only calculate when EIP data is entered.

Go to the Cr screen in the Credits folder and enter the amount, including zero (0), the taxpayer received for EIP3. The amount will be used on the worksheet. The following things are also considered when calculating this worksheet and credit:

• Taxpayer and/or Spouse social security fields that contain the following are treated as an invalid social security numbers for lines 2 through 4.
  • ITIN – begins with 9
  • Applied for
  • W7 Attached
  • Blank
• Form 1040NR return and 1040/SR returns that have the following state codes on Screen 1040 will not calculate the worksheet.
  • AS; American Samoa
  • GU; Guam
  • PR; Puerto Rico
  • VI; Virgin Islands
  • MP; N Mariana Islands
• The Filing Status Optimization Utility will split the EIP amounts as follows:
  • When amounts are only entered in Taxpayer/Joint column, the Filing Status Optimization Utility will split the amounts between Taxpayer and Spouse. 
  • When there are amounts in both the Taxpayer/Joint and Spouse fields, the Filing Status Optimization Utility will report the Taxpayer/Joint in the taxpayer's return and the Spouse amounts in the spouse's return.

For more information on the Recovery Rebate Credit, see the IRS website and Form 1040.

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