The Internal Revenue Service (IRS) is set to distribute check payments to more than a million taxpayers who missed out on their stimulus payouts.

The Internal Revenue Service (IRS) is set to distribute check payments to more than a million taxpayers who missed out on their stimulus payouts.

Is it possible that the United States Internal Revenue Service (IRS) owes you money?

According to the IRS, over one million taxpayers might have missed out on the Recovery Rebate Credit (RRC) that was claimable on their 2021 tax returns. The agency is currently taking measures to send out these payments. The payment amounts may vary, but the maximum amount is $1,400 per individual. The estimated total amount of payments being distributed is approximately $2.4 billion.

Background

The American Rescue Plan Act of 2021, passed in early March 2021, provided Economic Impact Payments (EIPs or stimulus payments) of up to $1,400 for eligible individuals or $2,800 for married couples filing jointly, plus an additional $1,400 for each qualifying dependent, including adult dependents.

The credit amount was subject to a phaseout – the amount was reduced if your adjusted gross income was more than $75,000 (or $150,000 for married couples filing jointly). The 2021 RRC amount was fully eliminated for taxpayers with an adjusted gross income of $80,000 or more ($160,000 or more for married couples filing jointly). Therefore, some individuals were unable to claim the 2021 RRC even if they received a 2020 stimulus payment. (These EIPs were in addition to payments mailed out in 2020 as part of the CARES Act.)

The payments were advance payments of the 2021 RRC that could be claimed on a 2021 tax return. The payments were distributed between March 2021 and December 2021 during the third round of EIPs issued by the IRS.

Taxpayers who did not receive the payments in 2021 or only received a small payment could claim the Recovery Rebate Credit on their 2021 federal income tax returns when they filed in 2022.

Why Are We Hearing About It Now?

After reviewing internal data, the IRS found that many eligible taxpayers had filed a return but had not claimed the credit. Qualified taxpayers are those who had filed a 2021 tax return but had left the RRC field blank or had entered $0 when they were actually eligible for the credit.

As a result of the review, the IRS will issue automatic payments to those taxpayers who had filed a return and were eligible for the credit but had not claimed it.

What Do You Need To Do?

You don't need to do anything. Payments will be sent out automatically in December and should arrive by late January 2025. The payments will be directly deposited into the bank account listed on your 2023 tax return or sent by paper check to the address of record. Eligible taxpayers will also receive a separate letter notifying them of the payment.

“The IRS is committed to making improvements and helping taxpayers,” stated IRS Commissioner Danny Werfel. “These payments are an example of our dedication to go the extra mile for taxpayers. Upon reviewing our internal data, we realized that one million taxpayers had overlooked claiming this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, eliminating the need for individuals to go through the extensive process of filing an amended return to receive it.”

Am I Eligible If I Didn't File A 2021 Tax Return?

Maybe. However, the IRS will not automatically send you a payment if you didn't file a return. If you didn't file a 2021 tax return and were eligible for the credit, you have until April 15, 2025, to file and claim the credit and any other refund you might be owed.

How Will I Receive My Payment?

The payment will be sent to the bank account listed on your 2023 tax return or to the address of record.

The IRS will send a letter to taxpayers receiving these 2021 RRC payments. If you have closed your bank account since filing your 2023 tax return, don't worry – the bank will return the payment to the IRS, and the refund will be reissued to the address of record.

Will I Have to Pay Federal Income Tax On The Payment?

The RRC is not taxable for federal purposes.

Will I Lose Federal Benefits If I Receive A Payment?

No. The RRC does not count as income when determining eligibility for federal benefits such as Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

Do I Need A Social Security Number (SSN)?

Generally, yes. You must have a valid SSN or claim a dependent with a valid SSN or Adoption Taxpayer Identification Number issued by the IRS to claim the credit.

If you file jointly with your spouse and only one individual has a valid SSN, you can claim up to $1,400 for the spouse with a valid SSN and up to $1,400 for each qualifying dependent claimed on the tax return.

If neither spouse has a valid SSN, you can claim only up to $1,400 for each qualifying dependent claimed on the tax return.

There’s an exception: If either spouse is an active member of the U.S. Armed Forces at any time during the taxable year, only one spouse needs to have a valid SSN for the couple to receive up to $2,800 for themselves, plus up to $1,400 for each qualifying dependent.

Misplacing your entitlement to remuneration is a possibility. To qualify for a reimbursement, you usually need to submit your tax declaration within a three-year span starting from the date the return was initially due (considering any extension you requested before the due date). This encompasses any Recovery Rebate Credit for 2021 that was integrated into your reimbursement.

The Recovery Rebate Credit (RRC) payments, which were part of the stimulus payments during the pandemic relief, were advance payments of up to $1,400 per individual from the IRS. However, over one million taxpayers might have missed out on claiming this credit on their 2021 tax returns. The IRS is now taking measures to send out these missed RRC payments.

If you did not receive the full amount of your stimulus payment or only received a small amount, you may be eligible for the Recovery Rebate Credit. Taxpayers who did not claim this credit on their 2021 tax returns and were found to be eligible after the IRS's internal review will receive automatic payments in December.

The RRC payments, also known as COVID payments, were part of the Economic Impact Payments distributed between March 2021 and December 2021, during the third round of EIPs issued by the IRS. These payments were meant to provide financial aid to eligible individuals during the COVID-19 pandemic.

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