The IRS is set to distribute $2.4 billion in unclaimed Recovery Rebate Credits to eligible taxpayers who missed out on claiming the credit for their 2021 tax returns.
At a Glance
- IRS to automatically issue unclaimed Recovery Rebate Credits to eligible taxpayers
- Approximately 1 million individuals expected to receive payments up to $1,400
- Payments to be distributed by January 2025 without need for amended returns
- Eligibility based on income thresholds and 2021 tax filing status
- IRS to send letters informing recipients about payments and calculations
IRS Takes Proactive Approach to Distribute Unclaimed Credits
The Internal Revenue Service (IRS) has announced a significant initiative to distribute approximately $2.4 billion in unclaimed Recovery Rebate Credits to eligible taxpayers. This move aims to benefit up to 1 million individuals who failed to claim the credit on their 2021 tax returns. The agency plans to automatically issue these funds by January 2025, with recipients potentially receiving up to $1,400 without the need to amend their previous submissions.
This measure underscores the IRS’s proactive approach to ensuring citizens receive pandemic-related aid they inadvertently bypassed. The Recovery Rebate Credit and stimulus payments were introduced in response to the economic challenges posed by the COVID-19 pandemic. Many taxpayers missed claiming this credit due to lack of awareness, misunderstandings, changes in circumstances, or filing issues.
Eligibility and Payment Details
Eligibility for these payments includes single taxpayers with income under $80,000, married couples with combined income under $160,000, and heads of household with income under $112,500. It’s important to note that dependents claimed in 2021 do not qualify for the payment. The amount each taxpayer receives will vary based on household income and dependents.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” said IRS Commissioner Danny Werfel.
The special payments target taxpayers who left the Recovery Rebate Credit field blank or filled it as $0 on their 2021 tax return. Payments are expected to be received by late January 2025 and will be sent to the bank account or address listed on the taxpayer’s 2023 tax return. If a bank account is closed, the IRS will reissue the payment to the taxpayer’s address.
The IRS said it's distributing about $2.4 billion to taxpayers who failed to claim a Recovery Rebate Credit on their 2021 tax returns. https://t.co/YRZ24iWNzI
— WLOS (@WLOS_13) December 23, 2024
Automatic Payments and IRS Communication
The IRS will issue these payments automatically, eliminating the need for recipients to file amended returns. This approach aims to streamline the process and ensure eligible taxpayers receive the funds they are entitled to without additional paperwork or complications.
“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,” explained Commissioner Werfel.
To keep recipients informed, the IRS will send letters explaining the payments and calculations. These communications are crucial for taxpayers to understand the nature of the payment and how it was determined. For those who haven’t filed their 2021 tax returns, there’s still an opportunity to receive the credit if eligible. However, they must file by April 15, 2025, to be considered.
IRS Commitment to Taxpayer Assistance
This initiative reflects the IRS’s ongoing efforts to address taxpayer needs in challenging economic conditions. The agency’s decision to review data and identify taxpayers who missed claiming the credit demonstrates a commitment to ensuring that all eligible individuals receive the support they are entitled to under the law.
For taxpayers uncertain about their 2021 tax return or eligibility for this credit, the IRS encourages consulting with tax professionals.
