The Internal Revenue Service (IRS) is set to distribute approximately 1 million special payments of up to $1,400 to eligible taxpayers who failed to claim the Recovery Rebate Credit on their 2021 tax returns. The move is part of the agency's effort to deliver about $2.4 billion to those who may have overlooked this important financial aid during the pandemic.
IRS Commissioner Danny Werfel stated, "Looking at our internal data, we realizedthat one million taxpayers overlooked claiming this complex credit when they were actually eligible." This initiative targets individuals who filed their 2021 taxes yet left the Recovery Rebate Credit field either blank or entered $0 when they should have claimed more.
Eligible taxpayers don't have to do anything to receive these payments. They're expected to be automatically distributed, with funds appearing via direct deposits or paper checks by late January 2025. The payments will either go to bank accounts noted on the taxpayer’s 2023 return or to the registered mailing address.
For those who missed out on previous COVID-19 stimulus payments—officially known as Economic Impact Payments—this payment offers another chance at financial relief. Most taxpayers entitled to the stimulus payments have already received their funds, but inspection of IRS data indicated this special group had been overlooked.
The maximum amount taxpayers can expect is $1,400. Payments vary based on individual circumstances. Here’s the detailed breakdown: recipients of these payments are primarily those who either did not claim the Recovery Rebate Credit due to errors or who were unaware of their eligibility.
IRS has made clear: no action is required by eligible taxpayers to get this money. They will automatically receive it based on tax data already submitted.
This initiative marks part of the government’s broader relief plan amid the COVID-19 pandemic, which saw three rounds of stimulus payments totaling approximately $814 billion sent out to support households. The payments were structured based on income, tax filing status, and the number of qualifying dependent children. The initial payment, initiated under the CARES Act back in March 2020, offered eligible individuals up to $1,200 and $500 per child. This was followed by subsequent rounds, offering $600 and $1,400 respectively under the Consolidated Appropriations Act and the American Rescue Plan Act.
Taxpayers who have yet to file their 2021 tax returns may still qualify for this credit. They must file by April 15, 2025, to claim the credit and receive any refund they may be owed. This emphasizes the importance of swift action for those who may have thought themselves disqualified or unaware of the additional benefits available to them.
Eligibility for the Recovery Rebate Credit allows many more taxpayers the opportunity to partake in financial recovery efforts initiated during the pandemic's peak. Although the likelihood of receiving this payment may seem low since many have already received their funds, those who qualify should check their IRS communications carefully, including the separate letters notifying them of any upcoming payments.
The IRS has also made information available on its website detailing how these payments will be calculated and ensuring eligible taxpayers know precisely what to expect moving forward. Therefore, it is prudent for those concerned about their tax statuses to remain well informed and proactive.
This relief effort serves as yet another reminder of the systemic challenges faced by millions during the COVID-19 crisis. With many households still recovering from the economic shock, ensuring access to available funds is more important than ever, and the IRS’s initiative may very well aid those who need it most.
