The Internal Revenue Service (IRS) has announced that approximately 1 million taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns will receive automatic payments later this month. These payments, which are part of the IRS’s ongoing efforts to assist taxpayers, are expected to arrive via direct deposit or paper check by late January 2025. The maximum payment per individual is $1,400, with total disbursements estimated at $2.4 billion.
Why the Automatic Payments?
The Recovery Rebate Credit is a refundable credit intended for individuals who did not receive one or more of the Economic Impact Payments (EIP) or stimulus payments during the COVID-19 pandemic. Upon reviewing internal data, the IRS identified taxpayers who filed a 2021 return but either left the Recovery Rebate Credit field blank or entered “$0” when they were actually eligible for the credit.
“These payments are an example of our commitment to go the extra mile for taxpayers,” said IRS Commissioner Danny Werfel. “Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.”
Who Qualifies for These Payments?
The automatic payments are designated for taxpayers who filed a 2021 return but missed claiming the Recovery Rebate Credit. These individuals:
- Filed a 2021 tax return.
- Did not claim the Recovery Rebate Credit, despite being eligible.
- May have overlooked the credit due to its complexity.
The IRS has clarified that no action is required by eligible taxpayers. Payments will be sent to the bank account listed on the taxpayer’s 2023 tax return or to the address the IRS has on file. Additionally, a notification letter will be sent to inform recipients of their payment.
For Non-Filers: There’s Still Time
Taxpayers who haven’t filed their 2021 tax returns still have a chance to claim the Recovery Rebate Credit. To qualify, they must file their returns by April 15, 2025. This includes individuals with minimal or no income who may otherwise not be required to file a return. Filing could also enable them to claim other potential refunds.
Understanding the Recovery Rebate Credit
The Recovery Rebate Credit was designed to ensure that eligible individuals received the full amount of their Economic Impact Payments. Payments are based on income, filing status, and the number of qualifying dependents. Taxpayers who are unsure of the amounts they received can check their IRS Online Account for details.
Notable Points:
- Payments do not count as income when determining eligibility for federal benefits such as SSI, SNAP, TANF, and WIC.
- The maximum payment is $1,400 per eligible individual, and amounts will vary based on individual circumstances.
Looking Back at COVID Stimulus Payments
During the pandemic, three rounds of stimulus payments were issued, totaling $814 billion:
- March 2020: Up to $1,200 per filer and $500 per child (CARES Act).
- December 2020: Up to $600 per filer and $600 per child (Consolidated Appropriations Act).
- March 2021: Up to $1,400 per filer and $1,400 per child (American Rescue Plan Act).
Need Assistance Filing Your Taxes?
If you need help filing your current or past tax returns, Delia Law is here to assist. Whether you’re navigating complex tax credits or need guidance on filing requirements, their experienced team specializes in providing personalized tax solutions. Contact Delia Law, P.C. to learn more and schedule a consultation.