The IRS is preparing to distribute special payments of up to $1,400 to 1 million taxpayers who qualify but did not claim a certain tax credit for the year 2021. Here’s a detailed explanation of these payments:
IRS Announces Special Payments
The IRS recently announced that it would issue automatic payments of up to $1,400 to 1 million individuals. These are for those who didn’t claim the 2021 Recovery Rebate Credit on their tax returns, even though they were eligible. This tax credit aimed to provide financial relief to individuals who didn’t receive one or more stimulus checks during the COVID-19 pandemic.
Understanding the Recovery Rebate Credit
The Recovery Rebate Credit is a refundable tax credit available to taxpayers who missed receiving one or more of the stimulus checks sent out by the federal government. These stimulus checks were part of the measures to help people financially during the pandemic. The maximum amount of the credit is $1,400 per person and the total payments the IRS will make amount to approximately $2.4 billion.
Automatic Payment Process
IRS Commissioner Danny Werfel explained that internal reviews showed many taxpayers did not claim the credit due to its complexity. The IRS decided to make these payments automatic to simplify the process and ensure that eligible taxpayers receive their due money. Eligible individuals do not need to file an amended tax return to receive this money. The IRS plans to send out the payments in December, and most recipients should receive their funds by the end of January. The IRS will make the payments either through direct deposit for those with current bank account information on file or via paper checks mailed to the taxpayer’s address if the bank account on file is no longer active.
Eligibility and Impact on Other Benefits
To be eligible for this payment, taxpayers must qualify for the 2021 Recovery Rebate Credit. This primarily includes individuals who filed their tax returns for 2021 but did not claim the credit, whether by not filling out the field or entering $0. Those who have not yet filed a tax return for 2021 can still file by April 15, 2025, to claim this credit and any other refunds they might be owed. Importantly, claiming the Recovery Rebate Credit does not affect a taxpayer’s eligibility for other federal benefits like Supplemental Security Income (SSI), the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
For more detailed information on these payments, including eligibility criteria and payment amounts, taxpayers are encouraged to visit the IRS website. This proactive approach by the IRS aims to ensure that all eligible taxpayers receive the financial support they deserve but might have missed due to the complexities of tax law.