The Internal Revenue Service (IRS) has announced that around $2.4 billion worth of automatic payments will be sent out later in December to taxpayers who were eligible for a pandemic-era tax break but didn’t claim the COVID cash.
The recovery rebate credit is a refundable credit for taxpayers who did not receive one or more Economic Impact Payments, also known as stimulus payments or stimulus checks. It can reduce the amount of taxes owed, increase a tax refund, or result in a direct payment from the IRS to eligible taxpayers.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” IRS Commissioner Danny Werfel said in a statement.
Qualified recipients include taxpayers who filed a 2021 tax return and either left the recovery rebate credit field blank or entered $0, despite being eligible for the credit. Normally, people who didn’t claim the recovery rebate credit would have to file an amended tax return in order to collect it, but the IRS has waived this requirement.
“To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it,” Werfel said.
Payments of up to $1,400 per individual will either be directly deposited into taxpayers’ bank accounts or sent via paper check, with most expected to arrive by late January 2025. Additionally, taxpayers will receive a separate letter notifying them of their payment.
Individuals who have not yet filed their 2021 tax returns may still be eligible for the credit, the IRS clarified. However, such taxpayers must file their returns by April 15, 2025, to claim the credit and any other potential refunds.
For those who qualify, payments will either be sent to the bank account or mailing address associated with their 2023 tax return. If a bank account listed on file has been closed, the payment will be reissued to the taxpayer’s address of record. The IRS noted that no additional steps are required from taxpayers in these cases.
Claiming the recovery rebate credit will not impact eligibility for federal benefit programs, including Supplemental Security Income and Supplemental Nutrition Assistance Program.
As the 2025 tax season approaches, the IRS is ramping up efforts to inform taxpayers about various credits and deductions, including those introduced as part of pandemic-related relief measures.
