The Internal Revenue Service (IRS) has announced that nearly one million taxpayers will soon receive stimulus payments of up to $1,400 each. These payments are for individuals who missed claiming the Recovery Rebate Credit (RRC) on their 2021 tax returns. The initiative is designed to ensure that those eligible for financial relief during the pandemic receive the funds they may have overlooked or missed.
The IRS estimates the total value of these payments to be $2.4 billion. Payments will be distributed automatically, meaning taxpayers do not need to take any action. The funds will be delivered either as direct deposits to bank accounts on file or as paper checks sent to registered mailing addresses.
This initiative aims to provide financial support to those who experienced economic hardship during the pandemic and ensure that eligible individuals receive the relief they are entitled to. If you’re unsure whether you qualify or how the process works, this article will break down the details for you in simple terms.
Who Is Eligible for These Payments?
To qualify, individuals must meet the following criteria:
- Filed a 2021 Tax Return: You must have filed a tax return for the 2021 tax year, which serves as the basis for determining eligibility.
- Missed Claiming the Recovery Rebate Credit (RRC): The payments are specifically for taxpayers who made one of two common mistakes on their 2021 tax return:
- They left the RRC section blank.
- They incorrectly listed the RRC as $0, despite being eligible.
These errors often occurred because taxpayers were unsure of their eligibility or misunderstood the process for claiming the credit.
- Eligible for Economic Impact Payments (EIPs): Individuals must have been eligible for at least one of the three rounds of Economic Impact Payments (EIPs) issued during the pandemic. If they missed claiming these payments or received less than they were entitled to, they qualify for this correction.
How Much Will Eligible Individuals Receive?
Eligible taxpayers could receive up to $1,400, but the amount depends on several factors, including:
- The total amount of stimulus payments already received in earlier rounds.
- The individual’s income, tax filing status, and number of dependents in 2021.
For example:
- A single taxpayer who didn’t receive any of the previous stimulus payments may qualify for the full $1,400.
- A family of four (two parents and two children) that missed claiming their credits could receive up to $5,600 ($1,400 per family member).
How Will the IRS Send the Payments?
The IRS is automating the payment process, so eligible taxpayers do not need to take any action. Here’s how the payments will be issued:
- Automatic Payments: The IRS will send payments automatically to eligible individuals without requiring additional forms or requests.
- Delivery Methods:
- Direct Deposit: Payments will be deposited into the bank account linked to the taxpayer’s most recent tax return (such as the 2023 return).
- Paper Checks: If no bank account is on file, a paper check will be mailed to the address the IRS has on record. Be sure your address is updated to avoid delays.
- Notification Letters: The IRS will send letters to recipients with details on the payment, including the amount and how it was calculated. These letters should be kept for future reference.
- Timeline for Delivery: Payments are expected to be sent out by late January 2025. Taxpayers should monitor their bank accounts and mailboxes for any delays.
What to Do if You’re Eligible
If you believe you qualify for these special payments, here’s what you should do:
- Verify Your 2021 Tax Return: Check if you missed or incorrectly filled out the RRC section of your return.
- File Your Tax Return (If Unfiled): If you haven’t yet filed your 2021 tax return, do so by April 15, 2025, to claim the credit.
- Update Your Information: Ensure your mailing address and bank account details are current with the IRS to avoid delays.
What If You Haven’t Filed Your 2021 Tax Return?
If you haven’t filed your 2021 tax return yet, you can still claim the Recovery Rebate Credit and receive the special payment. The deadline to file your 2021 return is April 15, 2025. This gives you ample time to submit your return, but it’s important to act sooner to ensure eligibility for the payment.
Even individuals with little or no income during 2021 might qualify simply by filing their tax return. Filing could result in a payment of up to $1,400, depending on your individual circumstances.
Overview of COVID-19 Stimulus Payments
To understand the significance of these payments, let’s revisit the three rounds of stimulus payments issued during the pandemic:
| Stimulus Round | Amount Per Individual | Amount Per Dependent | Legislation |
|---|---|---|---|
| Round 1 (March 2020) | Up to $1,200 | $500 per qualifying child | CARES Act |
| Round 2 (December 2020) | Up to $600 | $600 per qualifying child | Consolidated Appropriations Act |
| Round 3 (March 2021) | Up to $1,400 | $1,400 per qualifying child | American Rescue Plan Act |
These rounds totaled $814 billion in payments, offering vital financial relief during the peak of the pandemic.
Why Is the IRS Sending These Payments Now?
The IRS is sending these payments to ensure people who missed out on money they were eligible for during the pandemic receive it now. IRS Commissioner Danny Werfel explained that about one million taxpayers did not claim the Recovery Rebate Credit on their 2021 returns due to the complexity of the process. Many left the section blank or filled it out incorrectly.
To correct this, the IRS reviewed its records and identified eligible taxpayers who missed out. Now, they are sending payments automatically to ensure everyone gets the support they deserve. Commissioner Werfel stated, “We realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible.”
