IRS Sending $2.4 Billion in Missed Stimulus Payments

IRS Sending $2.4 Billion in Missed Stimulus Payments \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ The IRS is distributing $2.4 billion in stimulus payments to approximately 1 million taxpayers who overlooked claiming the Recovery Rebate Credit on their 2021 tax returns. These payments, up to $1,400 per individual, will be issued automatically by the end of January. Taxpayers still have until April 2025 to claim the credit if they haven’t filed their 2021 tax return.

IRS Missed Stimulus Payments: Quick Look

• What’s Happening: The IRS is sending out $2.4 billion in missed stimulus payments to eligible taxpayers who didn’t claim the Recovery Rebate Credit on their 2021 tax returns.
• Eligibility: Taxpayers who filed a 2021 tax return but failed to claim the Recovery Rebate Credit are eligible for these payments.
• Payment Amounts: Payments can reach up to $1,400 per individual, with some families receiving more based on dependents.
• No Action Required: The IRS is automatically issuing payments to qualified taxpayers by direct deposit or mail.
• Deadline to Claim: Taxpayers who haven’t filed their 2021 tax return can still claim the Recovery Rebate Credit by April 15, 2025.

Deep Look

The IRS is distributing $2.4 billion in missed stimulus payments to taxpayers who did not receive their Economic Impact Payments (EIPs) during the pandemic or failed to claim the Recovery Rebate Credit on their 2021 tax returns. This large-scale initiative will provide financial relief to approximately 1 million eligible taxpayers, with payments of up to $1,400 per individual set to arrive by the end of January. This move addresses gaps in the initial distribution of stimulus funds and ensures that eligible individuals receive the support they were entitled to during the COVID-19 crisis.

The Recovery Rebate Credit: A Second Chance for Stimulus Relief

The Recovery Rebate Credit was introduced as a mechanism to ensure that individuals who missed out on their stimulus payments could still claim these funds. It applies to taxpayers who did not receive one or more of the three rounds of Economic Impact Payments distributed during the pandemic.

The credit is refundable, meaning eligible individuals can receive the funds as part of their tax refund, even if they have no tax liability. According to IRS Commissioner Danny Werfel, this initiative aims to address oversights in claims for the credit:
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible.”

Why the IRS Is Issuing Automatic Payments Now

After reviewing internal data, the IRS found that many taxpayers who filed their 2021 tax returns had left the Recovery Rebate Credit field blank or entered $0, despite being eligible. To streamline the process and avoid requiring these individuals to file amended returns, the IRS opted to distribute the payments automatically.

“To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic,” Werfel explained.

By making the process seamless, the IRS ensures that eligible taxpayers receive their payments without the need for additional paperwork or delays.

Real-Life Impact of the Payments

For taxpayers like Colorado resident Ginny Bultman, the initiative has already brought much-needed financial relief. Bultman and her husband, who run a locksmith business, missed their stimulus payments in 2021. Upon learning about the IRS’s new program, she discovered that her family qualified for the Recovery Rebate Credit. Within a day of confirming her eligibility, she received $4,200 in payments, including funds for their underage son.

“It was a pleasant surprise,” said Bultman, reflecting the positive impact these payments have on families who struggled during the pandemic.

Who Qualifies for These Payments?

The IRS is targeting taxpayers who meet the following criteria:

• Filed a 2021 tax return.
• Did not claim the Recovery Rebate Credit or mistakenly claimed $0 in the credit field.

These individuals are automatically eligible to receive the payments without the need to file an amended return.

How Much Will Taxpayers Receive?

Eligible taxpayers can receive up to $1,400 per individual. For families, the total payment can increase significantly based on the number of qualifying dependents. For example, a family of four could receive up to $5,600 in total stimulus funds.

The IRS calculates payment amounts based on income, filing status, and dependents reported on the taxpayer’s 2021 tax return.

How Will Payments Be Issued?

Payments will be sent automatically through direct deposit or mailed checks. The IRS will use the bank account or address listed on the taxpayer’s 2023 return or the most recent contact information on file. Additionally, the IRS plans to send letters notifying eligible taxpayers about their payment.

What If You Haven’t Filed Your 2021 Tax Return?

Taxpayers who did not file a 2021 tax return can still claim the Recovery Rebate Credit by filing before the extended deadline of April 15, 2025. Even individuals with little to no income, who were not required to file a return, may be eligible for the credit if they submit a return.

This extended window ensures that anyone who missed out on their stimulus payments still has time to claim their funds.

The History of COVID-19 Stimulus Payments

During the pandemic, the U.S. government distributed three rounds of stimulus payments to support individuals and families affected by the economic fallout. These payments, totaling $814 billion, were based on income, tax filing status, and the number of dependents.

1. March 2020 (CARES Act):
   • Up to $1,200 per income tax filer.
   • $500 per child dependent.
2. December 2020 (Consolidated Appropriations Act):
   • Up to $600 per income tax filer.
   • $600 per child dependent.
3. March 2021 (American Rescue Plan Act):
   • Up to $1,400 per income tax filer.
   • $1,400 per dependent, including adult dependents.

The Recovery Rebate Credit was introduced to address gaps in the initial distributions, ensuring that eligible taxpayers who missed one or more payments could still receive the funds owed to them.

Why This Initiative Matters

The IRS’s decision to distribute these payments automatically reflects a commitment to providing financial relief to eligible taxpayers who may have been overlooked. For many individuals and families, these payments represent a vital source of support as they continue to recover from the pandemic’s economic impact.

By addressing gaps in stimulus distribution and simplifying the process, the IRS is not only ensuring fairness but also building trust in its ability to manage taxpayer resources effectively.

Conclusion

The $2.4 billion in missed stimulus payments represents a significant effort by the IRS to address oversights and provide financial relief to eligible taxpayers. With automatic payments reaching approximately 1 million individuals by the end of January, this initiative underscores the importance of the Recovery Rebate Credit as a lifeline for those affected by the pandemic.

Taxpayers who believe they may qualify should verify their eligibility and, if necessary, file a 2021 tax return before the April 2025 deadline to claim the funds they are owed.

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