The Internal Revenue Service (IRS) has announced that it will distribute $2.4 billion in “special payments” to 1 million individuals who failed to claim federal stimulus checks on their 2021 tax returns. This information was revealed by the agency on Friday.
The IRS has announced that it will issue automatic payments later this month to individuals who failed to claim the 2021 Recovery Rebate Credit. This credit is refundable and is intended for those who did not receive one or more of the stimulus payments, which are officially referred to as Economic Impact Payments (EIP).
The Significance of the Issue
In the aftermath of the pandemic, the U.S. economy has shown resilience; however, many Americans continue to face challenges due to rising prices, particularly in essential areas such as food and housing.
In polls leading up to the November election, the economy emerged as the foremost concern among voters. This comes even as inflation has notably decreased from its peak of 9.1 percent in June 2022, while the U.S. continues to showcase a robust job market and steady growth.
Preelection surveys, along with Donald Trump’s victory on November 5, indicated that voters held the current administration accountable for the surge in inflation following the pandemic and for their ongoing financial difficulties.
With inflation on the rise for two consecutive months in October and November, American consumers are looking for any relief available. The IRS “special payments” are seen as a welcome support for taxpayers during this challenging economic period.
Essential Information
The agency announced its decision following a thorough review of internal data, which indicated that 1 million eligible taxpayers who submitted their returns for the year 2021 failed to claim the credit they were entitled to. Individuals have been identified who either left the data field for the Recovery Rebate Credit blank or indicated “$0,” despite being eligible for the credit.
The Recovery Rebate Credit was established for individuals who did not receive the full amount of the three stimulus payments distributed between 2020 and 2021 that they were eligible for.
Eligible taxpayers can expect varying payment amounts, with a maximum limit set at $1,400 for each individual.
Public Reactions
IRS Commissioner Danny Werfel stated, “The IRS is diligently working to implement improvements and assist taxpayers.” The payments serve as a clear demonstration of our dedication to exceeding expectations for taxpayers. Internal data analysis reveals that 1 million taxpayers failed to claim this complex credit despite being eligible.
“In an effort to reduce complications and ensure that eligible taxpayers receive their payments promptly, officials have announced that these payments will be made automatically. This means that recipients will not need to navigate the lengthy process of filing an amended return to obtain their funds.”
What Lies Ahead
Individuals eligible for the payment will receive it automatically, with no action required on their part. Payment is expected to be received by the end of December or by late January 2025.
Individuals who qualify will have the payment deposited directly into their bank accounts or receive it via paper checks, accompanied by a separate notification letter regarding the payment. If a taxpayer has closed their bank account after submitting their 2023 tax return, the bank is obligated to return the automatic payment to the IRS. Subsequently, the IRS will forward the payment to the most recent address on file.
This year, the deadline for filing federal income tax returns for 2024 is set for April 15, 2025. However, individuals who opt for an extension will have until October 15, 2025, to submit their returns.
