IRS will send checks to over a million taxpayers who missed stimulus payments

Does the Internal Revenue Service owe you money?

According to the IRS, over a million taxpayers may have missed the Recovery Rebate Credit (RRC) claimed on their 2021 tax returns. The agency is now taking steps to send these by mail. Although the amounts may vary, the maximum payment is $1,400 per person. The estimated amount of outgoing payments will be approximately $2.4 billion.

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The American Rescue Plan Act of 2021, signed into law 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, as well as $1,400 for each eligible dependent , including adult family members.

There was a phase-out for the credit amount – the amount was reduced if your adjusted gross income was more than $75,000 (or $150,000 for married couples filing jointly). For taxpayers with adjusted gross income of $80,000 or more ($160,000 or more for married couples filing jointly), the 2021 RRC amount was reduced entirely to $0. This means that some people would not be able to claim the 2021 RRC even if they received a 2020 stimulus payment. (These EIPs were in addition to payments sent out in 2020 as part of the CARES Act.)

The payments were advance payments of the 2021 RRC that were claimed on a 2021 tax return. This means payments have already arrived in mailboxes and bank accounts before the 2021 tax filing season. The IRS began issuing the third round of EIPs in March 2021 and lasted until December 2021.

Taxpayers who did not receive the payments (or received only a small amount) in 2021 can claim the recovery credit on their 2021 federal income tax return when they file in 2022.

Why are we hearing about this now?

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

(Initially, the IRS said that if you entered $0 or left the credit line blank, it would not calculate the RRC for you or correct your entry.)

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

What do you have to do?

You don’t have to do anything. Payments will be made automatically in December and should arrive by the end of January 2025. Payments will be automatically direct deposited or sent by check – eligible taxpayers will also receive a separate letter informing them of the payment.

“The IRS continues to work hard to make improvements and help taxpayers,” said IRS Commissioner Danny Werfel. “These payments are an example of our commitment to going the extra mile for taxpayers. When we looked at our internal data, we found that a million taxpayers overlooked claiming this complex credit, even though they were actually eligible. To minimize hassle and make this money available to eligible taxpayers, we are making these payments automatically so that these individuals do not have to go through the extensive process of filing an amended tax return to receive them.”

Am I eligible if I haven’t filed a 2021 tax return?

Perhaps. However, the IRS won’t automatically send you a payment if you haven’t filed a tax return. If you didn’t file a 2021 tax return and were eligible for the credit, you did until April 15, 2025to submit and claim the credit and any other refund you may be entitled to.

How do I receive my payment?

Payment will be made to the bank account or address specified on your 2023 tax return.

The IRS is sending a letter to taxpayers who will receive 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.

Do 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 Special Supplemental Nutrition Program for Women . Infants and Children (WIC).

Do I need a Social Security Number (SSN)?

In general, yes. To claim the credit, you must have a valid SSN or apply for a dependent with a valid SSN or an Adoption Taxpayer Identification Number issued by the IRS.

If you file jointly with your spouse and only one person 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 eligible dependent listed on the tax return make.

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

There is one exception: If one of the spouses is an active member of the United States Armed Forces at any time during the tax year, only one of the spouses must have a valid SSN for the couple to claim up to $2,800 for themselves and up to $1,400 -Dollars for each receives based on qualifications.

What happens if I haven’t filed my 2021 tax return yet and don’t do so before the filing deadline?

You lose your right to payment. To claim a refund, you generally must file your tax return within three years of the tax return due date (including extensions if you requested the extension by the due date) to receive that refund. This includes the 2021 Refund Credit amount included in your refund.