IRS will send checks to more than 1 million taxpayers who missed out on stimulus payments

Does the Internal Revenue Service owe you money?

The IRS says more than 1 million taxpayers may not have received the Recovery Rebate Credit (RRC) claimed on their 2021 tax returns. The agency is currently taking steps to mail them out . Although amounts may vary, the maximum payment is $1,400 per person. The estimated amount of payments will be approximately $2.4 billion.

Background

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 a joint application, plus $1,400 for each eligible dependent, including adult dependents.

The amount of the credit was subject to a phase-out: the amount was reduced if your adjusted gross income was more than $75,000 (or $150,000 for married couples filing jointly). The 2021 RRC amount has been reduced entirely to $0 for taxpayers with adjusted gross income of $80,000 or more ($160,000 or more for married couples filing jointly). 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 mailed in 2020 as part of the CARES Act.)

The payments were 2021 RRC advances claimed on a 2021 tax return. This means the payments landed in mailboxes and bank accounts before the 2021 tax filing season. The IRS began issuing the third series of EIPs in March 2021 and continued until December 2021.

Taxpayers who did not receive payments in 2021 (or only received a small payment) could claim the Recovery Rebate Credit on their 2021 federal tax return when they file in 2022.

Why are we hearing about it now?

After reviewing internal data, the IRS determined that many eligible taxpayers had filed but not claimed 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 it would not calculate the RRC for you or correct your entry if you enter $0 or leave the line blank for the credit.)

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

What should you do?

You don’t have to do anything. Payments will be released automatically in December and are expected to arrive by the end of January 2025. Payments will be automatically direct deposited or sent by paper check. Eligible taxpayers will also receive a separate letter notifying 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. By reviewing our internal data, we realized that a million taxpayers neglected to apply for this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we are making these payments automatic, meaning these individuals will not have to go through the lengthy process of filing an amended return to receive it.

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

Maybe. But the IRS won’t automatically send you a payment if you haven’t filed a return. If you did not file a tax return for 2021 and were eligible for the credit, you have until April 15, 2025to file and claim credit and any other refunds that may be owed to you.

How will I receive my payment?

Payment will be sent to the bank account listed on your 2023 tax return or to the address on file.

The IRS will send a letter to taxpayers receiving these 2021 RRC payments. If you have closed your bank account since filing your 2023 tax return, don’t worry: the bank will send the payment back to the IRS and the refund will be reissued to the registered address.

Do I have to pay federal income tax on the payment?

The CRR is not taxable for federal purposes.

Will I lose federal benefits if I receive a payment?

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 the special supplementary nutrition program for women. Infants and Children (WIC).

Do I need a Social Security Number (SSN)?

In general, yes. You must have a valid SSN or claim a dependent with a valid SSN or adoption tax identification number issued by the IRS to claim the credit.

If you are filing 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 reported on the tax return.

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

There is one exception: If one spouse is an active member of the U.S. armed forces at any time during the tax year, only one spouse must have a valid SSN for the couple to receive up to $2,800 for himself, plus up to $1,400 for each. eligible dependent.

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

You will lose your right to payment. To request a refund, you generally must file your tax return within three years of the return due date (including extensions if you requested the extension before the due date) to get this reimbursement. This includes any 2021 Recovery Rebate Credit amount included in your refund.