In a recent initiative, the Internal Revenue Service (IRS) announced plans to distribute special payments of up to $1,400 to approximately one million taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns.
This effort aims to rectify oversights and ensure eligible individuals receive the financial support they are entitled to.
IRS Recovery Rebate Credit
The Recovery Rebate Credit was introduced to provide financial relief during the COVID-19 pandemic. It allowed individuals who missed out on Economic Impact Payments (stimulus checks) or received less than the full amount to claim the difference on their tax returns.
Despite this provision, the IRS identified that many eligible taxpayers either left the credit field blank or entered $0 on their 2021 returns, missing out on substantial payments.
Eligibility Criteria for the Upcoming Payments
The IRS has specified that these special payments will be automatically issued to taxpayers who meet the following conditions:
- Filed a 2021 Tax Return: Individuals must have submitted a tax return for the year 2021.
- Did Not Claim the Recovery Rebate Credit: The Recovery Rebate Credit field was either left blank or incorrectly filled with $0, despite eligibility.
It’s important to note that most taxpayers who were eligible for the initial stimulus payments have already received them. This current initiative targets those who inadvertently missed claiming the credit on their 2021 returns.
Distribution Details
Eligible taxpayers are not required to take any action to receive these payments. The IRS will process and distribute the funds automatically, with the following timeline:
- Payment Method: Funds will be directly deposited into the bank account provided on the taxpayer’s 2023 return or sent via paper check to the address on file.
- Timeline: Payments are scheduled to be issued in December 2024, with most recipients expected to receive their funds by late January 2025.
- Notification: The IRS will send separate letters to inform eligible taxpayers about the payment details.
Payment Amounts
The amount each taxpayer receives will vary based on individual circumstances, with a maximum payment of $1,400 per person.
The total distribution is estimated to be around $2.4 billion, reflecting the IRS’s commitment to ensuring eligible individuals receive their due benefits.
Action Steps for Non-Filers
Taxpayers who have not yet filed their 2021 tax returns still have an opportunity to claim the Recovery Rebate Credit.
The IRS has set a deadline of April 15, 2025, for these filings. Even individuals with minimal or no income are encouraged to file to receive any refunds or credits they may be entitled to.
Overview of Previous Stimulus Payments
During the COVID-19 pandemic, the U.S. government issued three rounds of stimulus payments to support households:
- First Round (March 2020): Under the CARES Act, eligible individuals received up to $1,200, with an additional $500 per qualifying child.
- Second Round (December 2020): Through the Consolidated Appropriations Act, payments of up to $600 were issued per individual and per qualifying child.
- Third Round (March 2021): The American Rescue Plan Act provided up to $1,400 per individual and per qualifying dependent.
These payments were determined based on factors such as income, tax filing status, and the number of dependents.
| Round | Legislation | Payment per Individual | Payment per Child/Dependent | Date Issued |
|---|---|---|---|---|
| 1 | CARES Act | Up to $1,200 | $500 | March 2020 |
| 2 | Consolidated Appropriations Act | Up to $600 | $600 | December 2020 |
| 3 | American Rescue Plan Act | Up to $1,400 | $1,400 | March 2021 |
Key Takeaways
- Automatic Payments: Eligible taxpayers will receive payments without needing to take any action.
- Maximum Amount: Up to $1,400 per individual.
- Distribution Period: December 2024 to late January 2025.
- Non-Filers Deadline: April 15, 2025, to file 2021 tax returns and claim the credit.
Who is eligible for the upcoming $1,400 payment?
Taxpayers who filed a 2021 tax return but did not claim the Recovery Rebate Credit, despite being eligible, will receive the payment automatically.
Do I need to take any action to receive this payment?
No action is required. The IRS will automatically distribute the payments to eligible individuals.
How will I receive the payment?
Payments will be direct deposited into the bank account on file from your 2023 tax return or sent via paper check to your registered address.
