The Internal Revenue Service (IRS) has announced plans to distribute $2.4 billion worth of "special payments" to approximately 1 million Americans who failed to claim federal stimulus checks on their 2021 tax returns. This initiative is aimed at providing much-needed financial relief as the holiday season approaches.
The IRS will begin issuing automatic payments later this month for those who have yet to claim the Recovery Rebate Credit—an available refund for individuals who did not receive all or any of the three Economic Impact Payments (EIP) issued between 2020 and 2021. According to the agency, these payments could each reach up to $1,400 per individual.
Despite the resilience shown by the U.S. economy following the pandemic, many Americans are still grappling with high costs, especially for necessities such as food and housing. Preelection surveys have consistently highlighted economic concerns as predominant issues for voters, with inflation recently creeping up again, having risen for two consecutive months as of October and November. This backdrop makes the IRS's move to issue these payments especially significant—providing much-needed support just as concerns about price increases resurface.
IRS Commissioner Danny Werfel remarked, "The IRS continues to work hard to make improvements and help taxpayers. These payments are an example of our commitment to go the extra mile for taxpayers. Looking at our internal data, we realized... these complex credits when they were actually eligible." His statement reiterates the agency's effort to simplify the process for eligible taxpayers, who will not need to navigate extensive paperwork to receive their funds.
The decision to disburse these funds came after reviewing IRS internal data, which indicated about 1 million eligible taxpayers failed to claim the Recovery Rebate Credit properly—often leaving the field blank or entering "$0" on their tax forms. This credit was initially created to support individuals who did not receive their full stimulus payments during the pandemic.
Taxpayers set to receive these payments will not need to take any action. The IRS has ensured these distributions will be automatic; eligible individuals can expect the funds to either be directly deposited to their bank accounts or sent as paper checks by the end of December 2023 or by late January 2025. A separate notification letter will be sent to those receiving the payments.
For those who did not file taxes for 2021, there is still an opportunity to be eligible for these payments. According to the IRS, individuals can file their returns up until April 15, 2025, to claim both the credit and any other refunds owed.
Overall, the IRS's initiative is poised to alleviate some financial pressure on many Americans who were unable to fully benefit from earlier pandemic relief measures. With economic uncertainties on the rise, taxpayers will likely appreciate any extra help they can get this season.
