Millions of U.S. taxpayers may be in line to receive a stimulus check by the end of January 2025 if they did not claim the Recovery Rebate Credit on their 2021 tax returns. The IRS announced this automatic distribution to ensure eligible taxpayers receive funds without the burden of filing 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 missed out on one or more Economic Impact Payments (EIPs), commonly referred to as stimulus payments. This credit aims to provide financial support to taxpayers who were eligible but did not claim their entitlement.
Why Are These Payments Being Issued Now?
After analyzing internal data, the IRS identified approximately one million taxpayers who were eligible for the credit but failed to claim it on their 2021 tax returns. To simplify the process and avoid additional paperwork, the IRS decided to make these payments automatic.
Danny Werfel, IRS Commissioner, 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.”
How Will Taxpayers Receive Their Payments?
The IRS confirmed that eligible taxpayers would receive their payments automatically, without needing to take any action.
- Payment Methods: Funds will be distributed via direct deposit or paper check, depending on the information provided in 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 notify eligible taxpayers through separate letters confirming their stimulus payments. Additionally, taxpayers can review their 2021 tax returns to verify whether they claimed the Recovery Rebate Credit. Specifically, they should check if the field for this credit was left blank or marked as $0.
How Much Will Each Payment Be?
The maximum payment an eligible taxpayer can receive is $1,400. The exact amount will vary based on individual circumstances, such as income levels and filing status. Nationwide, the IRS is distributing an estimated $2.4 billion in stimulus payments.
What If You Didn’t File a 2021 Tax Return?
Taxpayers who did not 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.
- The IRS emphasized that filing a 2021 return as soon as possible ensures eligible individuals can access these funds without unnecessary delays.
Steps for Non-Filers
- Gather necessary documents, such as Form W-2s or 1099s, to complete the 2021 tax return.
- Use free resources available through the IRS website, such as Free File, to submit a return if income is below a certain threshold.
- File the return electronically to expedite processing and ensure eligibility for the Recovery Rebate Credit.
Why This Matter
The IRS’s initiative simplifies the process for taxpayers, ensuring funds reach those who may have missed out due to confusion or oversight. Eligible taxpayers should monitor their mail and bank accounts to confirm receipt of these payments.
FAQs:
Do I need to contact the IRS to receive the payment?
No, the IRS is issuing payments automatically to eligible taxpayers who filed their 2021 returns but did not claim the credit.
How will I know if I qualify for the payment?
The IRS will send a notification letter to all eligible taxpayers. Additionally, you can review your 2021 tax return to check if you claimed the Recovery Rebate Credit.
What if my bank account has changed since I filed my 2021 return?
If the direct deposit fails, the IRS will mail a paper check to the address on file.
