If you haven’t yet submitted your 2021 tax returns, you could be overlooking a COVID stimulus payment. Taxpayers who are eligible for the Recovery Rebate Credit must submit their 2021 tax returns by April 15, 2025, in order to receive the credit.
Earlier this year, the IRS revealed that it will be distributing around $2.4 billion to taxpayers who missed out on their COVID stimulus payments. The agency noted that these payments are for those who did not claim a Recovery Rebate Credit on their 2021 tax returns. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), commonly known as stimulus payments.
“After examining our internal data, we discovered that approximately one million taxpayers neglected to claim this complex credit despite being eligible,” stated IRS Commissioner Danny Werfel.
Here’s what you should know:
The special payments being issued by the IRS target individuals who filed a 2021 tax return but either left the Recovery Rebate Credit information blank or erroneously reported it as $0 when they were qualified for the credit.
While the payment amounts will differ, the maximum sum an individual can receive is $1,400. Overall, the IRS is set to distribute approximately $2.4 billion to those taxpayers who failed to claim the Recovery Rebate Credit in their 2021 tax returns.
The IRS has provided details online regarding eligibility and the methods used to calculate these payments.
The Recovery Rebate Credit is a refundable credit available to individuals who missed out on Economic Impact Payments, or stimulus checks, during 2020 and 2021. A refundable tax credit allows recipients to receive a refund even if they owe no taxes.
The IRS launched this initiative after discovering that numerous eligible taxpayers who filed a 2021 tax return had failed to claim the credit.
“To ease the process and ensure these funds reach eligible taxpayers, we’re automating these payments, meaning individuals won’t need to undertake the cumbersome task of filing an amended return to obtain them,” Werfel explained.
If you are eligible for the Recovery Rebate Credit, no action is required on your part. The IRS intends to inform eligible taxpayers of the special payment by mailing letters. Payments will be disbursed automatically this month and should arrive via direct deposit or check by late January, sent to the bank account listed on the taxpayer’s 2023 return or to the address the IRS has on file.
There is still a possibility for you to receive this financial aid. However, it is essential for taxpayers to file a tax return and claim the Recovery Rebate Credit by the April 15, 2025, deadline, even if they had little to no income from employment, business, or other sources, as per the IRS.
There were three rounds of payments provided to households affected by the pandemic, amounting to a total of $814 billion. The IRS determined the amounts distributed to taxpayers based on factors like income, tax filing status, and the number of children or qualifying dependents.
In March 2020, qualifying individuals received up to $1,200 per income tax filer and $500 per child under the CARES Act. By December 2020, eligible individuals could receive up to $600 per income tax filer and $600 per child via the Consolidated Appropriations Act. Then in March 2021, eligible individuals received up to $1,400 per income tax filer and $1,400 per child as part of the American Rescue Plan Act.
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