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 specifically for individuals who missed claiming the Recovery Rebate Credit (RRC) on their 2021 tax returns. The IRS introduced this initiative to ensure that people eligible for financial relief during the pandemic receive the money they may have overlooked or missed.
The IRS estimates that the total value of these payments will amount to $2.4 billion. The funds will be sent out automatically, meaning taxpayers do not need to take any action. Payments will be delivered either as direct deposits to bank accounts the IRS has on file or as paper checks sent to mailing addresses already registered with the IRS.
This effort aims to provide financial support to those who faced economic difficulties during the pandemic and make sure eligible taxpayers do not miss out on the relief they are entitled to. For those wondering whether they qualify or how the process will work, this article will explain everything in simple terms to help clarify the details.
What Are These Stimulus Payments?
The stimulus payments being sent by the IRS are part of an effort to ensure that individuals who missed out on previous financial assistance during the COVID-19 pandemic receive their rightful money. These payments are specifically for those who were eligible for Economic Impact Payments but failed to claim the corresponding Recovery Rebate Credit on their 2021 tax returns.
The Recovery Rebate Credit allowed taxpayers to claim any missed or incomplete stimulus payments when filing their tax returns. Unfortunately, many people left this section of their tax forms blank or filled it out incorrectly, often assuming they were not eligible. To correct this issue, the IRS is now issuing these payments automatically.
Who Is Eligible for these Payments?
- Filed a 2021 Tax Return- To qualify, an individual must have submitted a tax return for the 2021 tax year. This return serves as the basis for determining whether someone missed claiming the Recovery Rebate Credit.
- Missed Claiming the Recovery Rebate Credit (RRC)- The special payments are aimed at taxpayers who made one of two common mistakes on their 2021 tax return:
- They left the Recovery Rebate Credit section blank.
- They filled out the section as $0 despite being eligible for a credit.
These mistakes often happened because taxpayers did not fully understand their eligibility or 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) that were distributed during the pandemic. If they missed claiming these payments or received less than they were entitled to, they qualify for this special correction.
How Much Will Eligible Individuals Receive?
The maximum payment amount is $1,400 per person. However, the exact amount will vary depending on several factors:
- The total amount of stimulus payments already received in the earlier rounds.
- The individual’s income, tax filing status, and number of dependents in 2021.
For example:
- A single taxpayer who did not receive any of the earlier stimulus payments may be eligible for the full $1,400.
- A family of four (two parents and two children) that missed claiming their credits could potentially receive up to $5,600 ($1,400 per family member).
How Will the IRS Send the Payments?
The IRS has automated the process to distribute these special payments, so eligible taxpayers do not need to take any action. Here’s how the payments will be handled:
Automatic Payments
The IRS will send payments automatically to eligible individuals without requiring any 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 one filed for 2023.
- Paper Checks: If no bank account is on file, a paper check will be mailed to the address the IRS has on record. Taxpayers should ensure their address is updated to avoid delays.
Notification Letters
The IRS will send a letter to recipients explaining the payment details, including the amount and how it was calculated. These letters should be kept for future reference.
Timeline for Delivery
Payments are expected to arrive by late January 2025. Taxpayers should check their bank accounts or mailboxes and contact the IRS if there are any delays.
Steps to Take If You’re Eligible
If you believe you might qualify for the special payments, here’s what you need to do:
- Verify Your 2021 Tax Return: Check if you left the Recovery Rebate Credit field blank or filled it incorrectly.
- File Your Tax Return (If Unfiled): Submit your 2021 tax return before the April 15, 2025, deadline to claim the credit.
- Update Your Information: Ensure your mailing address and bank account details are current with the IRS to avoid payment delays.
What If You Haven’t Filed Your 2021 Tax Return?
Taxpayers who have not yet submitted their 2021 tax returns still have a chance to claim the Recovery Rebate Credit and possibly receive the special payment from the IRS. To take advantage of this opportunity, the IRS has set a deadline of April 15, 2025, for filing 2021 tax returns.
This deadline gives individuals plenty of time to file their returns, but it is essential to act sooner rather than later to ensure eligibility for the payment. Importantly, this applies even to people who had little or no income during 2021. Whether someone earned income from a job, a small business, or other sources—or had no earnings at all—they might still qualify for this financial benefit simply by filing the required tax return.
For those who think they might be eligible, it’s a good idea to review their situation carefully and file the necessary paperwork as soon as possible. Filing a 2021 return could result in a payment of up to $1,400, depending on individual circumstances.
Overview of COVID-19 Stimulus Payments
To better 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 three rounds totalled $814 billion in payments and provided much-needed financial assistance to households during the height of the pandemic.
Why Is the IRS Sending These Payments Now?
The IRS is sending these payments to help people who missed out on money they were eligible for during the pandemic. IRS Commissioner Danny Werfel explained that about one million taxpayers didn’t claim the Recovery Rebate Credit on their 2021 tax returns because the process was complicated. Many left the section blank or filled it out incorrectly.
To fix this, the IRS reviewed its data and identified those who were eligible but didn’t receive the credit. Now, they are automatically sending payments to ensure everyone gets the financial support they deserve. Commissioner Werfel said, “We realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible.
