Skip to content
ChatProjectCodes

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 2020 return is filed head of household with 3 dependents and an AGI of $117,000. The primary taxpayer and dependents all have a valid SSN. The AGI exceeds the $112,500 limitation, and EIP phase out applies.EIP 3:$117,000 − $112,500 = $4,500Calculating the reduction percentage:$4,500 ÷ $7,500 = .6 (60%)Because the reduction percentage is less than 100%, an EIP 3 will be issued.Calculating the amount of the credit:$1,400 × 4 = $5,600$5,600 (maximum credit) × 60% (reduction percentage) = $3,360 (amount of reduction)$5,600 (maximum credit) − $3,360 (amount of reduction) = $2,240 (amount of EIP 3)

Taxpayers will report the tax year 2021 recovery rebate credit on their tax year 2021 return. The credit will be calculated based on the 2021 tax return information using the EIP 3 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 2021 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 2021 tax return to receive the RRC.

If the Non-Filers Tool was used to claim EIP 3, a simple return was filed for that taxpayer. When filing their 2021 tax return electronically, the taxpayer will need to enter $1 for the prior year AGI verification.

If the Non-Filers Tool was not used to claim EIP 3 and the taxpayer did not file a tax year 2020 return, the taxpayer will need to enter $0 for the prior year AGI verification.

Repayment is not required when a taxpayer received more advanced payment of the 2020 recovery rebate credit (EIP 1 + EIP 2) or more advanced payment of the 2021 recovery rebate credit (EIP 3) than they were entitled to.

Get a plain-English answer with a citation back to this text.

Ask AI about this code
Export this section
▸Contents — Internal Revenue Manual Part 25. Special Topics
Internal Revenue Manual Part 25. Special Topics

GoCodebook provides public access, search, citation, multilingual explanation, and practical interpretation of legally adopted building regulations. It is not a substitute for the official ICC or California code publications.