The Internal Revenue Service (IRS) has reported that more than 1 million taxpayers did not claim the “Recovery Rebate Credit” in 2021. To make up for this shortfall, the IRS is issuing special payments of about $2.4 billion to help eligible individuals get the stimulus funds they deserve as part of their COVID-19 relief.
What is the Recovery Rebate Credit?
The Recovery Rebate Credit was introduced as part of the COVID-19 relief measures. It was intended to allow individuals who did not receive their “Economic Impact Payments” (EIPs) or stimulus checks to claim it on their tax returns. These payments were distributed in three phases.
However, an IRS investigation found that about 1 million taxpayers did not claim this credit on their 2021 tax returns. Many of these people accidentally left the relevant section of the form blank or entered “$0.”
Automatic payment process
The IRS has arranged for automatic payments to simplify the process for taxpayers. Now taxpayers do not need to file amended returns.
- Direct deposit: Those whose bank account information is available in the 2023 tax return have been sent this amount directly to the bank account.
- Check by mail: Taxpayers who receive refunds through check will have this amount sent to their address by the end of January 2025.
IRS Commissioner Danny Werfle said that this move reduces the administrative burden and ensures that eligible taxpayers get their money without any delay.
Who is eligible?
The following are the conditions for eligibility:
- Has filed a tax return in 2021 but has not claimed the Recovery Rebate Credit.
- Be eligible to receive any phase of Economic Impact Payment under COVID-19 relief but has not received the payment.
The amount of these payments can be up to $1,400 per person.
Important information for taxpayers
- No action required: The IRS has already identified eligible individuals.
- Update banking information: If your bank account information has changed, check for direct deposit.
- Update address: If you are receiving payment by mail, make sure your address is correct in IRS records.
Update the address using Form 8822 when required.
Significance of this initiative
This effort by the IRS ensures that all eligible taxpayers get their full entitlement. Many taxpayers lost out on their benefits due to the complex provisions of relief during the COVID-19 pandemic. This initiative will also benefit families who missed filing the form at that time.
Frequently Asked Questions (FAQs)
1. Who is qualified for the $1,400 payment?
The ones who did not claim the Recovery Rebate Credit in tax year 2021 but were qualified.
2. Do I need to file a corrected return?
No, the IRS is issuing this payment automatically.
3. When will the check arrive by mail?
By the end of January 2025.
4. How do I update my address with the IRS?
By filling out Form 8822.
5. What if I don’t receive a direct deposit?
Wait for a paper check at your address.