The IRS plans to deliver up to $1,400 in “Special Payments” to 1 Million Taxpayers

The IRS intends to make automatic “special payments” of up to $1,400 to 1 million taxpayers beginning later this month, the agency revealed last week. Individuals eligible for the 2021 Recovery Rebate Credit but did not claim it on their tax returns for that year will get the payouts. The Recovery Rebate Credit is a refundable tax credit available to persons who did not receive one or more economic impact payments, sometimes known as stimulus cheques, issued by the federal government in response to the COVID-19 outbreak.

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According to the IRS, the maximum payment per individual will be $1,400, which may vary depending on circumstances. The agency plans to make payments totaling approximately $2.4 billion. “Looking at our internal data, we discovered that one million taxpayers failed to claim this complex credit when they were eligible,” IRS Commissioner Danny Werfel said in a statement. “To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.” 

No Action is required for Eligible Taxpayers:

The new payments are scheduled to be delivered automatically in December. According to the IRS, most payments should come by late January. Eligible taxpayers can expect to receive their money via direct deposit or a physical cheque in the mail. They will also receive a separate letter informing them of the cash. Direct deposit payments will be sent to taxpayers with current bank account information on file with the IRS. If eligible individuals have closed their bank accounts since filing their 2023 tax returns, the IRS will reissue payments using paper checks to the mailing addresses on file. The agency states that these taxpayers are not required to take any action.

How can you tell if you’re qualified?

The reimbursements will only be sent to taxpayers who qualify for the 2021 Recovery Rebate Credit, namely those who filed a 2021 tax return but did not claim the Recovery Rebate Credit despite being qualified, either by leaving that data field blank or putting $0.Taxpayers who have yet to file their 2021 tax forms can still claim the credit. However, to receive the credit and any additional refunds owed, they must submit by April 15, 2025. Claiming the Recovery Rebate Credit does not count as income and does not affect eligibility for certain other federal benefits, such as Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).