The IRS recently announced that approximately 1 million taxpayers will soon receive special payments of up to $1,400. These payments, part of a $2.4 billion distribution effort, will either be directly deposited into eligible individuals’ bank accounts or sent as paper checks via mail.
The payments stem from the Recovery Rebate Credit for the 2021 tax year. This credit allowed taxpayers to claim any COVID-19 stimulus payments they missed or received in incomplete amounts. However, the IRS identified many taxpayers who inadvertently failed to claim the credit despite being eligible.
Why Are These Payments Being Issued?
The IRS is distributing roughly $2.4 billion to taxpayers who failed to claim the Recovery Rebate Credit (RRC) on their 2021 tax returns. The Recovery Rebate Credit allowed taxpayers to claim missed or partial COVID-19 stimulus payments. However, the IRS recently discovered that many eligible taxpayers had overlooked this credit.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” said IRS Commissioner Danny Werfel in a statement.
Am I Eligible for a Special Payment?
While the news is exciting, the IRS clarified that the majority of taxpayers eligible for previous stimulus payments have already received them. This special payment is specifically for taxpayers who:
- Filed a 2021 tax return.
- Left the Recovery Rebate Credit field blank or entered “$0” when they were actually eligible for the credit.
If this applies to you, there’s a good chance you’ll be among the 1 million taxpayers receiving the unexpected payment.
How Will the Payments Be Distributed?
You don’t need to take any action to receive the payment. Here’s what you can expect:
- Payment Method: The IRS will automatically deposit the payment into the bank account listed on your most recent tax return or send a paper check to the address on file.
- Timeline: Payments are set to roll out throughout the month, with most taxpayers receiving them by late January 2025.
- Amount: The maximum payment is $1,400 per eligible individual.
The IRS will also mail letters to eligible taxpayers, detailing their payment amount and how it was calculated.
What If I Haven’t Filed My 2021 Tax Return?
It’s not too late! Taxpayers who haven’t yet filed their 2021 tax return can still claim the Recovery Rebate Credit. To qualify for the special payment, you must file your return by the April 15, 2025 deadline, even if you had minimal or no income during that year.
A Quick Recap: COVID Stimulus Payments
The federal government issued three rounds of stimulus payments during the pandemic, totaling $814 billion:
- March 2020 (CARES Act):
- $1,200 per filer
- $500 per qualifying child
- December 2020 (Consolidated Appropriations Act):
- $600 per filer
- $600 per qualifying child
- March 2021 (American Rescue Plan):
- $1,400 per filer
- $1,400 per qualifying child
These payments were based on income, filing status, and the number of qualifying dependents.
What Should You Do Now?
- Check Your 2021 Return: If you believe you may have overlooked the Recovery Rebate Credit, review your 2021 tax return.
- Stay Updated: Monitor your mail or bank account for the special payment notification or deposit.
- File Your Return: If you haven’t filed your 2021 tax return, there’s still time to claim the credit.
For more information on eligibility and payment calculations, visit the IRS Recovery Rebate Credit page.
These special payments offer a valuable opportunity for eligible taxpayers to receive financial support they missed during the initial stimulus distributions. Don’t miss out—take steps to ensure you’re prepared to receive what’s rightfully yours!
