The Internal Revenue Service (IRS) has announced plans to issue approximately $2.4 billion in stimulus payments to around one million taxpayers who missed out on claiming the Recovery Rebate Credit (RRC) for the 2021 tax year. These automatic payments aim to provide financial relief as the holiday season concludes.
Why Are These Payments Being Made?
According to the IRS, a review of internal data revealed that many taxpayers who filed their 2021 tax returns failed to claim the Recovery Rebate Credit, despite being eligible. Rather than requiring these individuals to amend their returns, the IRS has opted to issue the payments automatically.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” said IRS Commissioner Danney Werfel. He emphasized the agency’s commitment to simplifying the process for taxpayers by eliminating the need for amended returns.
How Will Payments Be Distributed?
Eligible recipients will receive their payments automatically by late January. The IRS will either deposit the funds directly into the bank accounts provided on 2023 tax returns or send a paper check to the address on file. No further action is required from eligible taxpayers to claim these payments.
What Is the Recovery Rebate Credit?
The Recovery Rebate Credit is a refundable tax credit for individuals who did not receive the full amount of their Economic Impact Payments (EIPs), commonly known as stimulus checks, during the COVID-19 pandemic.
While most taxpayers received their stimulus payments in three rounds during the pandemic, some eligible individuals missed out on these payments or did not claim the RRC when filing their 2021 taxes. These taxpayers now have a chance to receive the credit automatically.
Who Is Eligible?
Eligibility for the automatic payments is limited to:
- Taxpayers who filed a 2021 tax return but either left the RRC data field blank or entered $0 despite being eligible.
- Individuals who have not yet filed their 2021 tax returns. These taxpayers can still claim the credit by filing their return by April 15, 2025.
Even those with minimal or no income during 2021 may qualify for the credit if they meet the other criteria.
How Much Will Taxpayers Receive?
The amount each taxpayer receives will depend on several factors, with a maximum payment of up to $1,400 per individual. For example, a family of four could potentially receive up to $5,600 if they meet the eligibility criteria.
Taxpayers seeking more details on how their payment was calculated or their eligibility can visit the official IRS website.
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