In a key statement, the IRS has announced it will be disbursing almost $2.4 billion in payments to nearly a million taxpayers who didn’t originally receive their stimulus money during the COVID-19 pandemic. This would rectify a gap in EIP disbursements so that such eligible individuals received their due share of money.
Background on Economic Impact Payments
The Economic Impact Payments were a federal government response to the economic effects of the COVID-19 pandemic. These payments were one way to help individuals and families with expenses during this generally uncertain time. Throughout three rounds of payments, millions of Americans received funds based on their income, their tax filing status, and the number of dependent albeit the deadline for filing has already passed.
The first round, authorized under the CARES Act in March 2020, provided up to $1,200 per eligible adult and $500 per qualifying child. A second round was part of a relief package in December 2020 that upped the payments to $600 per adult and child. The final round, enacted as part of the American Rescue Plan in March 2021, was $1,400 per individual.
Despite these, some of the taxpayers did not get their full payments or failed to claim them altogether because of reasons such as errors in the filing of taxes or misunderstandings in eligibility.
Who qualifies for the $1,400 payment?
The IRS’s review last year showed that thousands of taxpayers who filed their 2021 tax return did not claim the Recovery Rebate Credit when they were eligible to do so because they did not receive all or part of their stimulus payments. Payments will be automatically sent to taxpayers who:
- Filed a 2021 tax return but did not report their Recovery Rebate Credit or reported it as $0.
- Were eligible for EIPs either by virtue of earning below $75,000 for single filers or $150,000 for joint filers
- Did not receive the complete benefit of the stimulus pay of which they were entitled during the pandemic.
This, according to IRS Commissioner Danny Werfel, forms part of broader measures aimed at ensuring that all deserving taxpayers get benefits that are due them without them going through those sometimes unnecessarily cumbersome and complicated processes for application of the same.
When the payments will be mailed
IRS officials have said that distributions for this refund will start this coming December 2024. The majority of affected taxpayers should get their refund no later than the end of January 2025. Payments will be direct deposit or paper checks mailed to people.
To streamline this process and minimize administrative burdens on taxpayers, no action is required from those eligible for these payments. The IRS will automatically calculate and issue the appropriate amounts based on its internal data review.
What should taxpayers expect?
Eligible taxpayers will be notified by letter from the IRS, showing their payment details. It will include the amount that they are eligible to get and further information on when and how the funds will arrive.
Taxpayers who have not yet filed their 2021 tax return but think they may be eligible for the Recovery Rebate Credit must file by April 15, 2025. Even if one has little or no income for that year, a return must be filed to obtain any refundable credits owed.
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