The IRS is distributing $2.4 billion in unclaimed Recovery Rebate Credits to approximately one million taxpayers who missed claiming their COVID-19 stimulus payments on their 2021 tax returns. This initiative aims to ensure eligible individuals and families receive the financial relief they may have overlooked. Here’s everything you need to know about these payments.
Why is the IRS Sending Out Stimulus Payments?
The Recovery Rebate Credit is a refundable credit for taxpayers who didn’t receive Economic Impact Payments (EIPs) during the pandemic. EIPs, commonly referred to as stimulus payments, were designed to provide financial relief during COVID-19.
After a review of its records, the IRS discovered that around one million taxpayers who filed 2021 tax returns didn’t claim this credit, despite being eligible. To simplify the process and ensure timely distribution, the IRS decided to send these payments automatically, avoiding the need for taxpayers to file amended returns.
Who is Eligible for the Stimulus Payments?
These payments are being sent to taxpayers who filed a 2021 tax return but either:
Left the Recovery Rebate Credit field blank, or
Entered “$0” in the field when they were actually eligible for a credit.
To qualify, individuals must meet the eligibility criteria that were in place for the original Economic Impact Payments. The IRS’s internal review identifies eligible taxpayers and automatically issues payments.
How Much Money Can You Expect?
The amount of money eligible taxpayers receive will vary, but the maximum payment is $1,400 per individual. This means a family of three could receive up to $4,200. The total amount distributed in this round of payments is approximately $2.4 billion.
For instance, Ginny Bultman from Colorado recently discovered she qualified for the Recovery Rebate Credit. She and her family received three late stimulus payments totaling $4,200 by the end of December, a welcome surprise.
How Will You Receive the Payment?
If you qualify, no action is required on your part. The IRS will send letters to eligible taxpayers notifying them of their payment. The money will be sent automatically via:
Direct Deposit: Payments will be deposited into the bank account listed on your 2023 tax return.
Check by Mail: If no direct deposit information is available, a check will be sent to the address the IRS has on file.
Payments are expected to arrive by late January.
What if You Haven’t Filed Your 2021 Tax Return?
If you haven’t filed your 2021 tax return yet, there’s still time to claim the Recovery Rebate Credit. The deadline to file and claim the credit is April 15, 2025. Even if your income from a job, business, or other sources was minimal or nonexistent, filing a return could make you eligible for the payment.
The IRS encourages taxpayers who missed out to take action soon to ensure they don’t miss the deadline.
A Quick Recap of COVID-19 Stimulus Payments
The U.S. government issued three rounds of stimulus payments during the pandemic:
March 2020 (CARES Act): Up to $1,200 per filer and $500 per qualifying child.
December 2020 (Consolidated Appropriations Act): Up to $600 per filer and $600 per qualifying child.
March 2021 (American Rescue Plan Act): Up to $1,400 per filer and $1,400 per qualifying child.
These payments were based on income, tax filing status, and the number of qualifying dependents. If you missed claiming any of these payments, the Recovery Rebate Credit serves as your final opportunity to receive the funds.
The IRS’s latest effort ensures that no eligible taxpayer is left behind. If you believe you qualify for this payment, keep an eye out for notification letters from the IRS, or file your 2021 return promptly to claim your credit. Don’t miss out on the financial relief you’re entitled to!
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