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THE Internal Revenue Service (IRS) announced plans to issue automatic payments to eligible taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns.
IRS officials announced the move Friday and said payments would be made automatically before the end of December. It follows an analysis by the agency which revealed approximately 1 million taxpayers did not claim the pandemic credit on their 2021 return even though they were eligible to receive it.
“The IRS continues to work hard to make improvements and help taxpayers,” IRS Commissioner Danny Werfel said in a statement. “These payments are an example of our commitment to going the extra mile for taxpayers.”
“In reviewing our internal data, we realized that a million taxpayers neglected to claim this complex credit when they were actually eligible for it,” Werfel said. “To minimize headaches and get this money to eligible taxpayers, we are making these payments automatic, meaning these individuals will not have to go through the lengthy process of filing an amended return to receive it.”
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The IRS is sending Recovery Rebate Credit payments to eligible taxpayers this month. (Spencer Platt/Getty Images/Getty Images)
Most taxpayers eligible for the Recovery Rebate Credit or one or more stimulus payments (EIP), also known as stimulus payments, have already received these credits and payments. The credits and stimulus payments were created in response to the Covid-19 pandemic.
The special payments announced by the IRS are intended for qualified taxpayers who filed a 2021 tax return with the data field for the Recovery Rebate Credit left blank or filled in with the words $0 even though the taxpayer was actually eligible for the credit.
Taxpayers who did not claim the credit, or part of it, on their 2021 tax return should receive payments from the IRS by the end of January 2025. Payment will be sent to the bank account listed on the taxpayer’s 2023 income tax return. or to their registration address.
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Internal Revenue Service Commissioner Daniel Werfel said the agency found that about a million taxpayers eligible for the rebate did not claim it on their 2021 tax returns. (Tom Williams/CQ-Roll Call, Inc. via Getty Images / Getty Images)
The Recovery Rebate Credit amounts that must be paid vary depending on several factors, although the maximum payment is $1,400 per person. The IRS estimates that the total amount of payments to distribute represents approximately $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 filing their tax return, taxpayers do not need to take any action because the bank will return the payment to the IRS, which will reissue the refund to the taxpayer’s address of record.
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A deadline is also looming in the first half of 2025 for taxpayers who have not filed their 2021 tax returns, as they must file the return by April 15 to still receive a recovery rebate credit to which they are entitled.