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f you haven’t submitted your 2021 tax returns, you may be missing out on a COVID stimulus payment. Tax filers who have not yet filed their 2021 returns and may qualify for the Recovery Rebate Credit must do so by April 15, 2025, in order to claim this credit.
Earlier this year, the IRS announced the distribution of approximately $2.4 billion to taxpayers who did not receive their COVID stimulus payments. The agency mentioned that these payments are going to taxpayers who neglected to claim the Recovery Rebate Credit on their 2021 tax returns. The Recovery Rebate Credit serves as a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), commonly known as stimulus payments.
“Upon reviewing our internal data, we discovered that around one million taxpayers inadvertently overlooked claiming this intricate credit, despite being eligible,” stated IRS Commissioner Danny Werfel.
Here’s what you need to know:
Who is eligible to receive a payment?
The special payments being distributed by the IRS are intended for those taxpayers who filed a 2021 tax return but either left the Recovery Rebate Credit field blank or filled it in as $0, though they were actually eligible for the credit.
How much will eligible taxpayers receive?
Payment amounts will vary, but the maximum payout will be $1,400 per individual. In total, the IRS plans to distribute around $2.4 billion to taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns.
The IRS has also made online information available regarding eligibility and the calculations for the payments.
Why is the IRS issuing stimulus checks?
The Recovery Rebate Credit is a refundable credit available to individuals who did not receive the Economic Impact Payments, or stimulus payments, during the years 2020 and 2021. A refundable tax credit allows you to receive a refund even if you do not owe any taxes.
The IRS launched this initiative after analyzing its internal data and realizing that many eligible taxpayers who filed a 2021 tax return neglected to claim the credit.
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“To streamline the process and ensure eligible taxpayers receive these funds, we are making these payments automatic, meaning these individuals won’t need to file an amended return to receive them,” said Werfel.
If I qualify for a stimulus payment, how will I receive it?
If you meet the criteria for the Recovery Rebate Credit, no action is required on your part. The IRS plans to notify eligible taxpayers via letters about the special payment. Payments will automatically be issued this month and should arrive via direct deposit or check by late January. They will be sent to the bank account detailed in your 2023 tax return or to the address that the IRS has on record.
What if I haven’t yet filed my 2021 tax return?
You may still qualify for the payment. However, taxpayers must file a tax return and claim the Recovery Rebate Credit by the April 15, 2025 deadline, even if their income from employment, business, or other sources was minimal or nonexistent, according to the IRS.
How many rounds of COVID stimulus payments were made?
Three rounds of payments were issued to households affected by the pandemic, totaling $814 billion. The IRS based the amounts received by taxpayers on their income, tax filing status, and number of children or qualifying dependents.
In March 2020, eligible individuals received up to $1,200 per income tax filer and $500 per child under the CARES Act. In December 2020, eligible individuals received up to $600 per income tax filer and $600 per child under the Consolidated Appropriations Act. In March 2021, eligible individuals were provided with up to $1,400 per income tax filer and $1,400 per child under the American Rescue Plan Act.
