The IRS has news for taxpayers who may have missed out on a recovery rebate credit. This month, the agency will automatically send payments to about one million eligible individuals who didn’t claim this credit on their tax returns.
These unclaimed stimulus payments are expected to total around $2.4 billion, with each eligible taxpayer receiving up to $1,400.
This initiative comes after the tax agency found that many taxpayers who filed their 2021 returns overlooked this tax relief. The recovery rebate credit was designed for those who didn’t receive one or more Economic Impact Payments, often called "stimulus checks."
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So, are you eligible to receive a check or direct deposit soon? Here’s more of what you need to know, beginning with key points about the recovery rebate credit and how it worked.
IRS $1,400 eligibility: What is the recovery rebate credit?
The recovery rebate credit was part of the U.S. government's financial response to the COVID-19 pandemic. It was a refundable tax credit linked to federal stimulus checks many people received during that time.
Here's how it worked: Eligible individuals who didn't get the full amount of their pandemic stimulus payments or whose circumstances changed could claim the recovery rebate credit on their 2021 tax returns.
- The credit's value depended on factors including income, filing status, and number of dependents.
- It was designed to ensure that people received the full financial support they were entitled to, even if they initially missed out on stimulus payments.
- For more information, see Kiplinger's report: What is the Recovery Rebate Credit?
However, many people didn’t receive their recovery rebate credit due to a lack of awareness about eligibility, misunderstandings regarding the credit's complexities, changes in financial circumstances, and issues related to filing tax returns.
Additionally, processing errors and confusion surrounding dependent claims contributed to missed payments, leaving some eligible individuals without the funds they were entitled to.
So, now, the IRS has decided to issue the payments automatically so recipients won’t have to file amended returns to get the money they’re owed.
"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," IRS Commissioner Danny Werfel said in a statement.
IRS 'stimulus' check 2025
The agency says eligible taxpayers can expect their payments to be processed by late January 2025, either through direct deposit or by paper check, depending on what they provided in their 2023 tax returns.
- If you closed your bank account since filing your 2023 tax return, the IRS says your bank will return the payment to the IRS and the agency will reissue the refund to the address of record.
- Additionally, the IRS will send letters to inform recipients about their payments and how the amounts were calculated.
Commissioner Werfel emphasized the agency’s commitment to helping taxpayers, saying, “These payments are an example of our commitment to go the extra mile for taxpayers.”
In a release, Werfel pointed out that many people qualified for this credit but didn’t claim it when filing their returns. “Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible."
However, it's important to note that most taxpayers eligible for the Economic Impact Payments already received their funds.
- The 2024 payments for the 2021 recovery rebate credit are being sent to individuals identified by the IRS as eligible but who didn't claim the credit on their 2021 tax returns.
- This includes those who left the recovery rebate credit field blank or reported $0 despite qualifying for the benefit.
Didn't file 2021 taxes? What you can do
The IRS is also reminding anyone who hasn’t yet filed their 2021 tax return that they might still be eligible for an up to $1,400 credit if they file by April 15, 2025.
“Eligible taxpayers who did not file must file a tax return to claim a recovery rebate credit, even if their income from a job, business or other source was minimal or non-existent,” the agency says on its website.
As tax season approaches, the IRS says it wants to help individuals understand and claim available credits and deductions —especially those related to COVID-19 relief. If you’re uncertain about your 2021 tax return, you may want to consult a trusted tax professional who can help.
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