The Internal Revenue Service (IRS) announced plans to issue automatic payments to eligible taxpayers who didn’t claim the Recovery Rebate Credit on their 2021 tax returns.
IRS officials announced the move on Dec. 20 and said the payments will be made automatically before the end of December. It follows an analysis by the agency that found roughly 1 million taxpayers didn’t claim the pandemic-related credit in their 2021 return when they were eligible to receive it.
“The IRS continues to work hard to make improvements and help taxpayers,” said IRS Commissioner Danny Werfel in a statement. “These payments are an example of our commitment to go the extra mile for taxpayers.”
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” Werfel said. “To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.”
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Most of the taxpayers who were eligible for the Recovery Rebate Credit or for one or more stimulus payments (EIP), also known as stimulus payments, have already received those credits and payments. The credit and stimulus payments were created in response to the COVID-19 pandemic.
The special payments announced by the IRS are for qualified taxpayers who filed a 2021 tax return with the data field for the Recovery Rebate Credit left blank or filled out as $0 when the taxpayer was, in fact, eligible for the credit.
Taxpayers who didn’t claim the credit, or a portion of it, on their 2021 tax return are expected to receive the payments from the IRS by late January 2025. The payment will be sent to the bank account listed on the taxpayer’s 2023 tax return or to their address of record.
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The amounts of the Recovery Rebate Credit that are set to be paid are variable based on several factors, though the maximum payment is $1,400 per individual. The IRS estimates that the total amount of payments to be distributed is roughly $2.4 billion.
The IRS will include a letter to taxpayers receiving their 2021 Recovery Rebate Credit payment. If a taxpayer has closed the bank account associated with their 2023 tax return since they filed, taxpayers don’t need to take any action as the bank will return the payment to the IRS, which will reissue the refund to the taxpayer’s address of record.
There is also a deadline looming in the first half of 2025 for taxpayers who haven’t filed their 2021 tax returns, as they have to file the return by April 15, 2025, to still receive a Recovery Rebate Credit that they’re eligible for.
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