In late December, the IRS announced plans to issue automatic payments to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns. The payments should be received in late January. No action is needed for eligible taxpayers to receive the credit with a maximum payment of $1,400.
Background
As part of various COVID-19 relief programs, the federal government issued Economic Impact Payments and a Recovery Rebate Credit. The latter was to be awarded on 2021 income tax returns. Upon reviewing internal data, the IRS determined that approximately 1 million taxpayers overlooked claiming this refundable credit. The IRS would not typically take proactive actions to pay out this money…instead the agency would normally remind taxpayers to claim any and all refunds before the statute of limitations runs out, which in this case is April 15, 2025. But in a surprise to many, the IRS is deciding to be proactive in this case.
What you need to know
No action is required on your part. If you or a family member is eligible for the credit, the IRS will automatically deposit the money in the direct deposit account noted on your 2023 tax return. If no bank account is noted, you will receive a paper check. Things to note:
Should you receive a payment, it is legitimate. There should also be a letter from the IRS explaining the payment.
Most taxpayers already received this credit. So no need to call wondering if you are going to get a payment. While $2.4 billion in payments going out is no small number, it only represents a small percentage of total payments to all taxpayers.
Double check 2021 non-filers. If you know of someone who did not file a 2021 tax return, it may be worth looking at doing so before April 15, 2025 or the ability to claim this credit goes away.
To learn more: See IRS IR-2024-314
James Angell is a Willits based Certified Public Accountant. His office is located at 461 S. Main St. and he can be reached at 707-459-4205.
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