The IRS is wrapping up the year with positive news for eligible taxpayers. Automatic payments of the Recovery Rebate Credit will be issued in late January 2025 to individuals who did not claim the credit on their 2021 tax returns. This initiative aims to streamline the process for taxpayers and ensure that everyone who qualifies receives their refund without additional hassle.
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Recovery Rebate Credit
The Recovery Rebate Credit is a refundable credit designed for individuals who missed out on one or more Economic Impact Payments (EIPs), commonly referred to as stimulus payments.
Key Highlights:
- Maximum payment per individual: $1,400.
- Payments will be automatic; no action is required for most eligible taxpayers.
- Estimated total disbursement: $2.4 billion.
Who Qualifies?
Eligible taxpayers include:
- Individuals Who Filed 2021 Returns Without Claiming the Credit
The IRS has identified about one million taxpayers who were eligible but did not claim the Recovery Rebate Credit on their 2021 tax returns. - Taxpayers Who Haven’t Filed Their 2021 Returns
Taxpayers who did not file in 2021 but are eligible for the credit can still file their tax return before the April 15, 2025 deadline to claim their payment.
Payments
Payments will be delivered automatically via:
- Direct Deposit: Payments will be sent to the bank account listed on the taxpayer’s 2023 tax return.
- Paper Check: For those without direct deposit details, checks will be mailed to the address on file.
Important Note
If a bank account has been closed since filing the 2023 return, the payment will be returned to the IRS and reissued as a paper check sent to the address on record.
How to Claim
Taxpayers who didn’t file a 2021 return must file one by April 15, 2025, to claim the Recovery Rebate Credit. This applies even if their income was minimal or nonexistent. Filing promptly can also help secure any other refunds owed.
IRS Notifications
To keep taxpayers informed:
- Letters Will Be Sent: Eligible recipients will receive a letter from the IRS notifying them of the payment.
- No Need for Amendments: Automatic payments eliminate the need to file an amended return, minimizing complexity for taxpayers.
IRS
The IRS Commissioner Danny Werfel emphasized that this initiative is part of a broader commitment to improving taxpayer services. By proactively identifying eligible taxpayers, the IRS is working to ensure no one misses out on refunds they’re entitled to.
“These payments are an example of our commitment to go the extra mile for taxpayers. By making the process automatic, we’re minimizing headaches and helping taxpayers access money they might not have known they were eligible for,” said Werfel.
Dates
- January 2025: Automatic payments begin.
- April 15, 2025: Deadline for filing 2021 tax returns to claim the credit.
The Recovery Rebate Credit payments offer significant financial relief, ensuring eligible taxpayers don’t leave money on the table. With this streamlined approach, the IRS is closing gaps and helping millions start 2025 on the right financial footing.
FAQs
What is the maximum Recovery Rebate Credit payment?
The maximum payment is $1,400 per individual.
When will the payments be issued?
Payments will be sent automatically by late January 2025.
Do I need to take action to receive the payment?
No action is needed if you already filed your 2021 tax return.
What if I didn’t file a 2021 tax return?
File a return by April 15, 2025, to claim the credit.
What happens if my bank account is closed?
The IRS will reissue the payment as a paper check.
