Millions of U.S. taxpayers may be eligible to receive a stimulus check by the end of January 2025 if they missed claiming the Recovery Rebate Credit on their 2021 tax returns. The IRS has announced this automatic distribution to ensure that taxpayers receive the funds without the need to file amended returns. Here’s everything you need to know about the payments and eligibility.
What Is the Recovery Rebate Credit?
The Recovery Rebate Credit is a refundable tax credit for individuals who were eligible for Economic Impact Payments (EIPs), commonly known as stimulus payments, but missed claiming them. This credit provides financial assistance to taxpayers who failed to receive the payments they were entitled to.
Why Are These Payments Being Issued Now?
After reviewing their records, the IRS discovered approximately one million taxpayers who were eligible for the Recovery Rebate Credit but did not claim it on their 2021 tax returns. To streamline the process and avoid additional paperwork, the IRS decided to distribute these payments automatically.
IRS Commissioner Danny Werfel explained, “Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic.”
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How Will Taxpayers Receive Their Payments?
The IRS confirmed that eligible taxpayers will receive their payments automatically, without needing to take any further action.
- Payment Methods: Funds will be distributed via direct deposit or paper check, depending on the information provided on the taxpayer’s 2021 filing.
- Timeline: Payments began rolling out in December 2024 and are expected to reach recipients by late January 2025.
How to Determine Eligibility
The IRS will send separate letters to eligible taxpayers confirming their stimulus payments. Taxpayers can also review their 2021 tax returns to see if they claimed the Recovery Rebate Credit. If the field for this credit was left blank or marked as $0, they may be eligible for the payment.
How Much Will Each Payment Be?
The maximum payment eligible taxpayers can receive is $1,400. The exact amount will vary based on individual factors like income levels and filing status. Overall, the IRS is distributing approximately $2.4 billion in stimulus payments.
What If You Didn’t File a 2021 Tax Return?
Taxpayers who didn’t file a 2021 tax return may still be eligible for the Recovery Rebate Credit if they file their return by April 15, 2025. Filing a return is necessary to claim the credit, even if the taxpayer had minimal or no income.
Steps for Non-Filers:
- Gather required documents, such as Form W-2s or 1099s, to complete the 2021 tax return.
- Use the IRS Free File program for assistance if income is below a certain threshold.
- File the return electronically to expedite processing and ensure eligibility for the Recovery Rebate Credit.
Why This Matters
The IRS’s automatic initiative simplifies the process, ensuring that eligible taxpayers receive their funds without unnecessary delays. Taxpayers should monitor their mail and bank accounts to confirm receipt of these payments.
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FAQs:
Do I need to contact the IRS to receive the payment? No, payments are being issued automatically to eligible taxpayers who filed their 2021 returns but did not claim the Recovery Rebate Credit.
How will I know if I qualify for the payment? The IRS will send a notification letter to all eligible taxpayers. You can also check your 2021 tax return to see if you claimed the Recovery Rebate Credit.
What if my bank account has changed since I filed my 2021 return? If the IRS cannot deposit the payment into your bank account, they will mail a paper check to the address listed on your 2021 tax return.
This initiative is designed to help taxpayers who missed claiming their stimulus payments receive the funds they’re entitled to, without additional hassle.
