Individuals who have not yet submitted their 2021 tax returns could be at risk of missing out on a COVID-related stimulus payment. Taxpayers eligible for the Recovery Rebate Credit must file their returns by April 15, 2025, to benefit from this credit.
Earlier in the year, the Internal Revenue Service (IRS) revealed it is in the process of disbursing approximately $2.4 billion to those who missed out on receiving their COVID stimulus payments. These distributions target taxpayers who didn’t claim the Recovery Rebate Credit on their 2021 returns. The Recovery Rebate Credit serves as a refundable credit for those who did not receive one or more Economic Impact Payments (EIP), more commonly known as stimulus payments.
IRS Commissioner Danny Werfel commented, “Upon examining our internal data, we discovered that around a million taxpayers overlooked claiming this credit, though they were qualified.”
Here are the essential details regarding the situation:
**Who qualifies for the stimulus payment?**
The IRS will send these payments to taxpayers who submitted a 2021 tax return but either left the Recovery Rebate Credit section blank or erroneously entered a value of $0 despite being eligible for the credit.
**What can eligible taxpayers expect to receive?**
While the payment amounts will vary, they can reach as high as $1,400 per individual. In total, the IRS is distributing about $2.4 billion to those who failed to claim the relevant credit on their 2021 tax returns.
**Why is the IRS distributing these stimulus checks?**
The Recovery Rebate Credit is intended as a refundable credit for individuals who did not receive the Economic Impact Payments during 2020 and 2021. This refundable tax credit is available even when an individual owes no taxes.
Upon reviewing internal data, the IRS recognized that many eligible individuals who filed a 2021 return did not claim this credit. To simplify the process and ensure eligible taxpayers receive their money, the IRS will issue these payments automatically, alleviating the need for taxpayers to file an amended return, Werfel highlighted.
**Receiving the stimulus payment—what should you do?**
Eligible taxpayers don’t need to take any specific action to receive the Recovery Rebate Credit. The IRS plans to notify eligible individuals through letters. The payments will be processed automatically and are expected to arrive by direct deposit or check by late January. The funds will be sent to the bank account or address, based on the information provided on the taxpayer’s 2023 return.
**What if you have not filed your 2021 tax return?**
There is still an opportunity to claim the payment. Taxpayers are required to file a tax return and claim the Recovery Rebate Credit by the April 15, 2025 deadline. The IRS advises that this applies even if the taxpayer had minimal or no income.
**Overview of COVID stimulus payments:**
There were three rounds of stimulus payments during the pandemic, totaling $814 billion. These payments were determined based on each taxpayer’s income, tax filing status, and the number of qualifying children or dependents. In March 2020, under the CARES Act, individuals received up to $1,200 per filer and $500 per child. December 2020’s Consolidated Appropriations Act permitted up to $600 per filer and $600 per child. Finally, March 2021’s American Rescue Plan Act provided up to $1,400 per filer and $1,400 per child.
