The Internal Revenue Service (IRS) is taking significant steps this December to address unclaimed federal aid from earlier pandemic stimulus packages, issuing checks and direct deposits totaling approximately $2.4 billion to around one million eligible taxpayers. These funds stem from Recovery Rebate Credits tied to the financial relief efforts made during the COVID-19 pandemic, and the IRS's initiative is aimed at ensuring those who missed out on such payments can receive them.
On Friday, IRS Commissioner Danny Werfel announced the upcoming disbursement, stating, "Looking at our internal data, we realized one million taxpayers overlooked claiming this complex credit when they were actually eligible." The automatic payments come as part of the IRS's continuous commitment to assist taxpayers during challenging economic circumstances.
For most eligible recipients, no action is required to receive these funds. Those who filed their taxes for the year 2021 will automatically receive payments—either through checks mailed to their home addresses or directly deposited to their bank accounts based on the information submitted on their most recent tax returns. The checks are expected to arrive by late January 2025.
Individuals may receive up to $1,400, with the total leaving the IRS varying for each taxpayer based on their specific circumstances. It's important to note, though, those who did not file their 2021 tax returns must do so by April 15, 2025, to qualify for the Recovery Rebate Credit. This applies even if they had no taxable income or only minimal earnings.
The initiative is notable as it signals the IRS's dedication to rectifying past oversights as well as highlighting the residual financial support still available from past stimulus measures. The payments will encompass funds left over from three major economic stimulus rounds legislated during 2020 and 2021.
Eligible taxpayers likely include those who have entered “0” or left the Recovery Rebate Credit section on their return blank when filing their 2021 taxes. This oversight means they missed out on funds they were entitled to, likely due to the complexity of the tax forms and credits available to them.
This recent announcement from the IRS follows previous rounds of economic stimulus payments intended to support individuals and families affected by the global pandemic. The stimulus payments began under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which disbursed up to $1,200 per individual and $500 per child. This was followed by additional payments under the Consolidated Appropriations Act of December 2020, which provided up to $600 for eligible individuals and children. Finally, the American Rescue Plan Act of 2021 saw another round, allowing potential payments of up to $1,400 per qualified individual.
Given this new round of payments will assist those currently struggling, it serves as an important reminder for eligible taxpayers to actively engage with their tax filings. For many, this could represent necessary support as they navigate challenges brought on by the pandemic.
Tax experts indicate this new issuance is particularly aimed at securing financial aid for individuals with limited resources who may have overlooked these credits during the filing process. Since these funds arrive during the holiday season, they could serve as much-needed financial relief for recipients.
Noteworthy, this initiative derives not only from the desire to support individuals and families but also aims to correct past errors identified by IRS audits and data analysis, highlighting the importance of maintaining accurate tax records and seeking out potential credits available during tax season.
The Taxpayer Advocate Service, part of the IRS, emphasizes the value of double-checking one’s tax filings and ensuring awareness of available credits like the Recovery Rebate Credit, especially as tax credits can sometimes be confusing and nuanced.
Looking forward, the IRS is committed to enhancing its outreach efforts, particularly among underserved communities, to guarantee taxpayers know about and can access available credits. Werfel noted the agency remains vigilant about improving taxpayer experience and ensuring equitable access to the various relief efforts which have been made available.
From economic relief to advice on tax compliance, the IRS is improving its systems to promote taxpayer education and outreach, aiming to reduce confusion and increase awareness around tax credits like the Recovery Rebate Credit. This new issuance of payments stands as part of their pledge to offer proactive support for the nation’s taxpayers.
Overall, the installment of $2.4 billion for 1 million taxpayers speaks volumes about the IRS's objective to not only distribute relief but also to educate taxpayers on preparedness and their rights on needed financial aid amid the economic repercussions of the pandemic.
