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

A TY 2019 return is filed head of household with 3 qualifying children and an AGI of $115,000. The AGI exceeds the $112,500 limitation, and EIP phase out applies. $115,000 − $112,500 = $2,500. $2,500 × 5% = $125.EIP 1: The taxpayer will receive $2,575 ($1,200 individual base amount + $1,500 for the qualifying children − $125 due to the phase out).EIP 2: The taxpayer will receive $2,275 ($600 individual base amount + $1,800 − $125 due to the phase out).

Taxpayers will report the tax year 2020 recovery rebate credit on their tax year 2020 return. The credit will be calculated based on the 2020 tax return information using the EIP 2 criteria for phase out and will be reduced by the total amount of the advanced payment(s) (EIPs) received. Any remaining credit will be allowed on the tax year 2020 return. Taxpayers who do not have a filing requirement and those who would not normally need to file but may be eligible for RRC MUST file a 2020 tax return to receive the RRC.

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▸Contents — Internal Revenue Manual Part 25. Special Topics

Internal Revenue Manual Part 25. Special Topics

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