The Internal Revenue Service (IRS) announced on December 20 that they will be issuing special payments of up to $1,400 to approximately one million taxpayers. These payments are set to be distributed later this month, targeting individuals who did not claim the Recovery Rebate Credit on their 2021 tax returns.
Understanding the Recovery Rebate Credit
The Recovery Rebate Credit is a refundable credit designed to assist individuals who did not receive one or more Economic Impact Payments (EIPs), commonly referred to as stimulus payments. According to the IRS, their internal data identified a significant number of eligible taxpayers who filed a return but failed to claim the credit. To address this oversight, the agency is proactively sending out these payments.
The payment amounts will vary based on several factors, with the maximum payout capped at $1,400 per individual. Collectively, these payments are estimated to total $2.4 billion, providing a substantial financial boost to eligible recipients.
No Action Required for Eligible Taxpayers
The IRS has assured taxpayers that no action is necessary to receive these payments. The disbursement process is automatic, with most recipients expected to have their payments by late January 2025. Depending on the taxpayer’s records, the payments will be either directly deposited into the bank account listed on their 2023 tax return or sent via paper check to the address on record.
Additionally, eligible taxpayers will receive a separate notification letter confirming the payment details. For those whose bank accounts have been closed since filing their 2023 tax return, the IRS will reissue the refund as a paper check sent to the address on file after the payment is returned by the bank.
Opportunity for Non-Filers of 2021 Tax Returns
The IRS is also extending a reminder to taxpayers who have not yet filed their 2021 tax returns. These individuals may still qualify for the Recovery Rebate Credit if they submit their returns by the April 15, 2025, deadline. Even those with minimal or no income from a job, business, or other sources are encouraged to file a tax return to claim the credit.
This initiative underscores the IRS’s efforts to ensure that eligible individuals receive the financial support they are entitled to. By reviewing their records and taking action to rectify unclaimed credits, the agency aims to provide relief to those who may have missed out on earlier stimulus payments.
What to Expect Next
The process is straightforward and requires no additional steps for taxpayers who are eligible for this payment. Those awaiting their payment should monitor their bank accounts or mailboxes over the coming weeks. For non-filers of the 2021 tax return, this announcement is an important reminder to act before the 2025 deadline.
In conclusion, the IRS’s announcement represents a significant effort to reach taxpayers who may have missed out on critical financial support. With an estimated $2.4 billion to be distributed, this initiative will provide much-needed assistance to millions of Americans.