The IRS recently announced plans to distribute automatic payments for the 2021 Recovery Rebate Credit, which may benefit millions of taxpayers who failed to claim it on their tax returns. According to the government agency, internal data showed around one million eligible individuals overlooked claiming this complex credit.
IRS Commissioner Danny Werfel emphasized the importance of this initiative, stating, "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."
These automatic payments, which will be sent out by the end of January 2023, aim to assist taxpayers who logged their 2021 tax returns without entering the Recovery Rebate Credit amount – either leaving it blank or marking it as $0. Eligible taxpayers may receive payments of up to $1,400, depending on their individual qualifications.
Eligible individuals do not have to take any action to receive these payments; they will be distributed either through direct deposit or as paper checks, based on the IRS' records. For those unsure about their eligibility, reviewing past tax returns is suggested. If the Recovery Rebate Credit section was left blank or marked as zero, they might qualify for these payments.
Historically, the IRS has issued three rounds of Economic Impact Payments (stimulus checks) during the COVID-19 pandemic to provide support to families facing financial hardships:
- First Round (March 2020 – CARES Act): Eligible taxpayers received up to $1,200 per individual and $500 per child.
- Second Round (December 2020 – Consolidated Appropriations Act): Payments of $600 per taxpayer and $600 per child were issued.
- Third Round (March 2021 – American Rescue Plan Act): Provided $1,400 per taxpayer and $1,400 per child.
Approximately 1 million taxpayers are set to benefit from this latest initiative which focuses on those who did not claim credits when they were due. The IRS will send out letters confirming these upcoming payments to recipients prior to the disbursement.
It's noteworthy to mention non-filers who believe they may have missed this opportunity. The IRS has stated, "Eligible taxpayers who did not file must file a tax return to claim a Recovery Rebate Credit, even if their income from a job, business, or other source was minimal or non-existent." This reiterates how important it is to file tax returns, even for those with limited or no earnings, as the deadline for filing to claim this credit is April 15, 2025.
With this move, the IRS aims to streamline the payment process and reduce the stress and confusion surrounding the Recovery Rebate Credit. The focus remains on ensuring funds reach those who need them most, efficiently and effectively.
Overall, the automatic payments for the 2021 Recovery Rebate Credit represent the IRS's commitment to enhancing taxpayer service and improving access to financial support. Taxpayers are encouraged to verify their eligibility and take advantage of this opportunity if they haven't already done so.
With millions of Americans still feeling the effects of the COVID-19 pandemic, these additional funds could offer much-needed help, reminding taxpayers of the importance of remaining informed about their rights and benefits under federal law.