In a new initiative, the Internal Revenue Service (IRS) has announced that nearly one million taxpayers will receive stimulus payments of up to $1,400 each.
These payments are aimed at individuals who missed out on claiming the Recovery Rebate Credit (RRC) during the 2021 tax season. The IRS introduced this effort to ensure that eligible taxpayers, who may have overlooked or failed to claim the credit, receive the financial relief they were entitled to during the COVID-19 pandemic.
The total value of these payments is expected to reach approximately $2.4 billion, providing much-needed support to those who experienced financial hardship during the pandemic. The payments will be issued automatically, meaning eligible individuals do not need to take any further action. Taxpayers will receive the funds either through direct deposit into their bank accounts, as per the details the IRS has on file, or as paper checks sent to the mailing addresses registered with the IRS.
Purpose of the Stimulus Payments
The stimulus payments being sent out by the IRS are a response to the fact that many individuals who were eligible for Economic Impact Payments (EIPs) did not claim the Recovery Rebate Credit when they filed their 2021 tax returns. The Recovery Rebate Credit was designed to allow taxpayers to claim any missed stimulus payments that they were eligible for during the pandemic. However, some individuals either left the credit section of their tax forms blank or filled it out incorrectly, often because they were unsure of their eligibility or did not fully understand how to claim it.
As a result, the IRS is issuing these automatic payments to ensure that no one misses out on the assistance they qualify for. The initiative aims to correct these oversights and provide those who missed out on financial relief with the funds they are owed.
Eligibility for the Payments
To qualify for the stimulus payments, individuals must meet several key criteria:
1. Filed a 2021 Tax Return: To be eligible, a taxpayer must have filed a tax return for the 2021 tax year. This return serves as the basis for determining whether the person missed claiming the Recovery Rebate Credit.
2. Missed Claiming the Recovery Rebate Credit: The IRS is targeting taxpayers who made two common mistakes when filing their 2021 taxes:
o They left the section for the Recovery Rebate Credit blank.
o They incorrectly filled out the section by claiming $0 despite being eligible for a credit.
3. Eligible for Economic Impact Payments: The special payments are for individuals who were eligible for at least one of the three rounds of Economic Impact Payments issued during the pandemic. If they missed claiming these payments or received less than what they were entitled to, they may be eligible for this correction payment.
How Much Will You Receive?
The amount of the stimulus payment will vary based on individual circumstances, including the amount of previous Economic Impact Payments received and the taxpayer’s income, filing status, and number of dependents. The maximum payment is $1,400 per person, but some families may receive much more. 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) who missed claiming their credits could potentially receive up to $5,600 ($1,400 per family member).
Delivery Methods and Timeline
The IRS will send the stimulus payments through automated processes. Eligible taxpayers will not need to submit any additional forms or requests. The payments will be delivered in two main ways:
• Direct Deposit: For those with a bank account linked to their most recent tax return, the payment will be automatically deposited into the account.
• Paper Checks: If the IRS does not have a bank account on file, paper checks will be sent to the taxpayer’s registered mailing address.
Taxpayers can expect to receive their payments by late January 2025. To ensure there are no delays, it’s important for taxpayers to verify that their mailing address and bank account details are up to date with the IRS.
What Should You Do If You’re Eligible?
If you believe you may be eligible for the special payments, here are the steps you should take:
1. Verify Your 2021 Tax Return: Check to see if you left the Recovery Rebate Credit field blank or made an error when filing your 2021 tax return.
2. File Your Tax Return: If you haven’t filed your 2021 return yet, make sure to submit it before the April 15, 2025 deadline. Doing so will allow you to claim the credit.
3. Update Your Information: Ensure your mailing address and bank account details are correct in the IRS system to avoid any delays in receiving your payment.
Haven’t Filed Your 2021 Tax Return Yet?
If you have not yet filed your 2021 tax return, you still have the opportunity to claim the Recovery Rebate Credit and potentially receive the $1,400 payment. The IRS has set an extended deadline of April 15, 2025, for filing these returns. Even individuals with little or no income during 2021 may still qualify for the credit by simply filing a return.
Taxpayers who believe they are eligible should file their 2021 tax return as soon as possible to take advantage of this opportunity. With potential payments of up to $1,400 per person, it is a vital opportunity for many to receive financial relief they might have missed during the pandemic.