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4 - Erroneous AbatementThe timely filed TC 150 return for TY 2018 is determined to be a nullity. The valid taxpayer filed a return reporting tax of $.00 and withholding of $2,500 which posted as a TC 976. Form 14039 is included with the return. The ASED for the valid return is expired. Based on the original return, the account shows TC 150 tax of $5,000, and withholding of $6,000. A CP 2000 proposing a tax increase of $2,000 based on unreported income is issued to the valid taxpayer’s last known

Example:

Internal Revenue Manual Part 25. Special Topics · 2026-10-03 edition · updated 2026-10-04 · United States

The total number of dependents on the return is 5. None of the dependents has a DOD, and 2 of the dependents have an ITIN.a. 5b. 0c. 2d. 2e. 5 − 2 = 3Calculation of EIP 3 and the tax year 2021 recovery rebate credit will include 3 dependents.

The EIP 1 credit amount is up to $1,200 ($2,400 for MFJ), plus an additional $500 for each qualifying child. The EIP 2 credit amount is up to $600 ($1,200 for MFJ), plus an additional $600 for each qualifying child. The EIP 1, EIP 2, and tax year 2020 RRC credits are subject to phase out if the AGI on the return considered (2019 or 2018) exceeds the following income limitations:

$150,000 for joint filers (filing status 2)

$150,000 for qualifying widow(er) (filing status 5) (EIP 2 only)

$112,500 for head of household filers (filing status 4 or 7)

$75,000 for all other filers

When EIP 1 or EIP 2 is subject to phase out, the credit is reduced by 5% of the taxpayer’s AGI exceeding the income limitations. See below for examples of calculating EIP when phase out applies.

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▸Contents — Internal Revenue Manual Part 25. Special Topics
Internal Revenue Manual Part 25. Special Topics

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