Are you potentially qualified to receive a stimulus check of up to $1,400 from the Internal Revenue Service?
Taxpayers who have yet to file their 2021 tax returns might be able to claim the Recovery Rebate Credit, but the deadline for filing is quickly approaching.
To claim the credit, eligible individuals must file by April 15, 2025.
Earlier this year, the IRS revealed plans to distribute approximately $2.4 billion to taxpayers who had not received their COVID stimulus payments. This initiative targets those who did not claim a Recovery Rebate Credit on their 2021 returns. The Recovery Rebate Credit is a refundable credit for those who missed one or more Economic Impact Payments (EIP), commonly known as stimulus payments.
“Our internal analysis showed that one million taxpayers overlooked claiming this complex credit even though they were eligible,” stated IRS Commissioner Danny Werfel.
Here’s what you should know:
Who is eligible to receive a check?
The special payments announced by the IRS are intended for taxpayers who filed a 2021 tax return but left the Recovery Rebate Credit field blank or declared it as $0 while being eligible for it.
How much money will eligible taxpayers receive?
While payments will vary, the maximum will be $1,400 per individual. In total, the IRS will distribute around $2.4 billion to taxpayers who failed to claim a Recovery Rebate Credit on their 2021 returns.
The IRS has provided information online regarding eligibility and how the payment amount was calculated.
Why is the IRS sending out stimulus checks?
The Recovery Rebate Credit serves as a refundable credit for individuals who didn’t receive the Economic Impact Payments, or stimulus payments, during 2020 and 2021. A refundable tax credit is one that can be refunded to you even if you have no tax liability.
The IRS initiated this action after analyzing internal data and discovering that many eligible taxpayers who filed a 2021 return did not claim the credit.
“To alleviate complications and ensure this money reaches eligible taxpayers, we’re making these payments automatic, meaning recipients won’t need to undergo the lengthy process of filing an amended return to get it,” added Werfel.
If I qualify for a stimulus payment, how will I receive it?
If you qualify for the Recovery Rebate Credit, no further action is required on your part. The IRS plans to send letters to eligible taxpayers informing them of the special payment. These payments will be processed automatically this month and should arrive via direct deposit or check by late January. Funds will be sent to the bank account listed on the taxpayer’s 2023 return or to the address on file with the IRS.
What if I haven’t filed my 2021 tax return yet?
You might still be eligible to receive the funds. 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 their income from work, business, or other sources was low or nonexistent, according to the IRS.
How many rounds of COVID stimulus payments were there?
There were three rounds of payments for households affected by the pandemic, totaling $814 billion. The IRS determined the amounts that taxpayers received based on their income, tax filing status, and number of children or qualifying dependents.
In March 2020, eligible individuals received up to $1,200 per tax filer and $500 per child under the CARES Act. In December 2020, eligible individuals received up to $600 per tax filer and $600 per child under the Consolidated Appropriations Act. In March 2021, eligible individuals received up to $1,400 per tax filer and $1,400 per child under the American Rescue Plan Act.
