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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

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

The tax year 2020 recovery rebate credit is not subject to offset for federal tax debts but is subject to offset for TOP debts.

If the Non-Filers Tool was used to claim EIP 1, a simple return was filed for that taxpayer. When filing their 2020 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 1 and the taxpayer did not file a tax year 2019 return, the taxpayer will need to enter $0 for the prior year AGI verification.

The EIP 3 credit amount is up to $1,400 ($2,800 for MFJ), plus an additional $1,400 for each allowable dependent. The EIP 3 and tax year 2021 RRC are subject to phase out if the AGI on the return considered (2019, 2020 or 2021) exceeds the following income limitations:

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

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

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

$75,000 for all other filers

Total phase out of EIP 3 occurs when the taxpayer’s AGI meets or exceeds the applicable amount for their filing status:

$160,000 for joint filers (filing status 2)

$160,000 for qualifying widow(er) (filing status 5)

$120,000 for head of household filers (filing status 4 or 7)

$80,000 for all other filers

When EIP 3 is subject to phase out, the reduction percentage will be determined using the taxpayer’s AGI and filing status. The standard amounts to be used in the formula for computation are listed below:

$10,000 for joint filers (filing status 2)

$10,000 for qualifying widow(er) (filing status 5)

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

$5,000 for all other filers

The reduction percentage will be calculated using the formula below and will be applied to the total amount of the credit.

Enter the AGI.

Enter the income limitation for the filing status.

If the amount in step a is more than the amount in step b, subtract the amount in step b from the amount in step a. Otherwise, enter zero.

Divide the amount in step c by the applicable standard amount in paragraph (20) for the filing status on the return. If more than 100% (1.0), enter only 100%. This is the amount of the reduction percentage.See below for examples of calculating EIP 3 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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