The Internal Revenue Service (IRS) is taking significant steps to assist approximately one million taxpayers who missed out on potential stimulus payments from the COVID-19 pandemic by issuing automatic checks of up to $1,400. This initiative reflects the IRS's commitment to rectifying oversights and ensuring taxpayers receive financial support as intended under relief provisions laid out by the American Rescue Plan Act of 2021.
IRS Commissioner Danny Werfel highlighted the importance of this project during a recent press release, stating, "Looking at our internal data, we realized 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 amended returns to receive it." This proactive measure aims to alleviate the burden on eligible recipients who may have found the tax filing process confusing or neglected the credit due to its complexity.
For those unaware, the Recovery Rebate Credit was introduced as part of the economic relief efforts during the pandemic, allowing individuals who did not receive the full amount of Economic Impact Payments—commonly known as stimulus checks—to claim the difference on their tax returns. Many taxpayers, it seems, either neglected to file for this credit or mistakenly filed it at $0. Consequently, the IRS has stepped in to guarantee these taxpayers receive the money they deserve without any additional administrative hassle.
Taxpayers eligible for this automatic payment must have filed their 2021 tax returns, but they left the Recovery Rebate Credit field blank or entered it incorrectly. These payments are anticipated to carry a total cost of roughly $2.4 billion. For single filers, the full credit of $1,400 is available to those with adjusted gross incomes (AGI) of $75,000 or less. The credit begins to phase out for incomes over this threshold, being entirely phased out at $80,000. Married couples filing jointly can receive the full $2,800 for two individuals if their combined AGI is $150,000 or less, with similar phase-out limits applying.
Eligible taxpayers will not need to take any investigative steps to determine if they will receive these checks. Instead, the IRS will utilize the banking details listed on submissions from the 2023 tax return to deposit payments directly, or send paper checks based on the address on file. Notifications will also be sent separately to each eligible taxpayer with details about their payment.
"These automatic payments reflect our commitment to go the extra mile for taxpayers,” Werfel said, emphasizing the IRS's determination to improve the system for taxpayer relief. While many filers may feel daunted at the prospect of potentially receiving funds, the IRS assures recipients of these payments not to worry—they are part of their rights as taxpayers.
The timeline for these payments indicates they should arrive by late January 2025. This timeline allows the IRS to finalize the necessary computations and direct deposits without overwhelming taxpayers during the regular tax season. For those who have yet to file their 2021 returns, the IRS still considers them eligible, but they must do so by April 15, 2025, to qualify for the Recovery Rebate Credit. The IRS has clarified, “Eligible taxpayers who did not file must file a tax return to claim Recovery Rebate Credit, even if their income was very low or non-existent.”
The IRS’s recent initiative serves as both reassurance and relief for many taxpayers who have faced vast financial challenges over the past few years. Broader economic conditions, combined with the impacts of the pandemic on employment and earnings, have necessitated relief measures such as these. By automatically sending these financial aids, the IRS not only aids individual taxpayers but also contributes to the overall economic recovery.
Conversely, potential recipients should be aware of certain limitations. The IRS noted, "most taxpayers have already received their federal stimulus checks or the recovery rebate credit." Therefore, this program is reserved primarily for those few who had the unfortunate experience of missing this opportunity. The stimulus payment process has always been complex, and this latest attempt to simplify it may be just what many individuals need to ease the financial strain as they seek to recover from the pandemic's lasting effects.
For more personalized information or if there are questions about eligibility, it is recommended for individuals to check their own IRS records and stay updated through IRS announcements.
