IRS Plans Automatic Payments for Missed Tax Credits

Clear Facts

• The IRS will issue automatic payments to approximately 1 million taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns.
• These payments are expected to be distributed by late January 2025 and could amount to a maximum of $1,400 per individual.
• The IRS is taking this step to ensure eligible taxpayers receive their due credits without needing to file an amended return.

In a recent announcement, the Internal Revenue Service (IRS) revealed its plan to distribute automatic payments to around one million taxpayers who missed out on claiming the Recovery Rebate Credit on their 2021 tax returns. This initiative is part of the IRS’s ongoing efforts to assist taxpayers and rectify oversights related to pandemic-related credits.

IRS Commissioner Danny Werfel emphasized the agency’s dedication to taxpayer support.

“The IRS continues to work hard to make improvements and help taxpayers,” Werfel stated.

He highlighted that the automatic payments aim to simplify the process for eligible individuals, sparing them the complexity of filing an amended return.

The Recovery Rebate Credit, along with stimulus payments, was introduced as a response to the COVID-19 pandemic. Although most eligible taxpayers have already received their credits, the IRS identified about one million who left the relevant section of their 2021 tax returns blank or incorrectly filled it out as $0.

These payments, expected by late January 2025, will be sent to the bank account listed on the taxpayer’s 2023 tax return or to their recorded address. The maximum amount for the Recovery Rebate Credit is $1,400 per individual, with the total distribution estimated at approximately $2.4 billion.

Taxpayers will also receive a letter from the IRS regarding their 2021 Recovery Rebate Credit payment.

If a bank account associated with their 2023 tax return has been closed, the IRS assures that the bank will return the payment, and it will be reissued to the taxpayer’s address of record.

Moreover, the IRS has set a deadline for taxpayers who have yet to file their 2021 tax returns. They must do so by April 15, 2025, to receive any eligible Recovery Rebate Credit. This deadline underscores the importance of timely filing to ensure eligible individuals receive their due benefits.

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