Some Americans who qualified for a pandemic-era tax credit but did not claim it on their tax returns will soon receive up to $1,400 in direct payments from the Internal Revenue Service (IRS).
This initiative is set to provide much-needed financial relief in the coming weeks. Below, we break down the eligibility, payment process, and key details to ensure you know what to expect.
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Who Will Receive These Payments?
The IRS has identified approximately 1 million taxpayers who qualified for the 2021 Recovery Rebate Credit but did not claim it. These individuals will receive an automatic lump-sum payment, with disbursements totaling an estimated $2.4 billion by the end of January.
The Recovery Rebate Credit was created for those who missed out on receiving the third round of federal stimulus checks following the pandemic-induced shutdowns. These payments are designed to ensure everyone eligible for the credit receives their due amount, even if they overlooked it during their 2021 tax filing.
Eligibility Criteria
To qualify for the payment, individuals must meet the following conditions:
- Income Thresholds:
- Single taxpayers who did not claim dependents in 2021 and earned less than $80,000 are eligible for some or all of the payment.
- Married couples filing jointly with a combined income of less than $160,000 also qualify.
- Taxpayers filing as head of household with incomes under $112,500 are eligible.
- Dependent Status:
- If you were claimed as a dependent on someone else’s 2021 tax return, you are not eligible for this special IRS payment.
- Maximum Credit:
- The maximum payment is $1,400 per eligible individual. For example:
- Married couples filing jointly can receive up to $2,800 if both partners qualify.
- Taxpayers with dependents who also meet the criteria may receive an additional $1,400 per dependent.
- The maximum payment is $1,400 per eligible individual. For example:
How Will the Payments Be Made?
Automatic Deposits or Mailed Checks
Eligible individuals will not need to take any action to claim their payment. The IRS will automatically deposit the money into the bank account listed on your 2023 tax return or send a check to your most recent address on record.
- Bank Account Changes: If the bank account you used for your 2023 tax return is no longer active, the IRS will mail the payment to your recorded address.
- Notification Letter: Once the payment has been issued, recipients will receive a separate notification letter from the IRS confirming the disbursement.
Deadline to File Missing Returns
If you didn’t file a 2021 tax return, you can still claim the payment by filing your return before April 15, 2025. Even individuals with no income or very minimal income in 2021 must file their tax returns to qualify for this special payment.
Factors Influencing Payment Amount
The payment amount each recipient receives will vary depending on:
- Household Income: Payments decrease as income approaches the upper eligibility thresholds.
- Dependent Status: Households with eligible dependents may qualify for additional payments.
- Filing Status: Whether you filed as single, married, or head of household in 2021.
The table below provides a breakdown of eligibility based on income and filing status:
| Filing Status | Income Limit | Maximum Payment |
|---|---|---|
| Single | Less than $80,000 | $1,400 |
| Married (Joint Filing) | Less than $160,000 | $2,800 (for two spouses) |
| Head of Household | Less than $112,500 | $1,400 |
| Dependents | N/A | $1,400 per dependent |
What Prompted the Payments?
The IRS Commissioner, Danny Werfel, explained that the payments resulted from a detailed review of IRS data, which revealed that many taxpayers missed claiming this “complex credit” on their 2021 tax returns. To simplify the process for taxpayers, the IRS is issuing these payments automatically without requiring individuals to amend their returns.
This initiative ensures that all eligible taxpayers who missed out on the 2021 Recovery Rebate Credit can receive the financial support they were entitled to. If you meet the criteria, keep an eye out for the payment in your bank account or mailbox soon!
FAQs
What is the 2021 Recovery Rebate Credit?
The Recovery Rebate Credit was designed for individuals who missed out on the third round of federal stimulus payments issued in 2021. It provides up to $1,400 per eligible person.
How will I know if I am eligible?
If you filed a 2021 tax return and met the income thresholds, you are likely eligible. Dependents and individuals claimed as dependents on someone else’s tax return, however, are not eligible.
When will I receive the payment?
The IRS plans to issue all payments by late January. Recipients will also receive a notification letter once the payment has been processed.
