In the coming weeks, roughly 1 million taxpayers will automatically receive special payments of up to $1,400 from the IRS. The funds will either be deposited directly into their bank accounts or mailed as paper checks, depending on the taxpayer’s preference and eligibility.

The IRS announced that it would be distributing approximately $2.4 billion to individuals who missed out on claiming the Recovery Rebate Credit when filing their 2021 taxes. This credit was available to those who did not receive a full stimulus payment or who missed one of the COVID relief payments altogether. The IRS revealed that many eligible taxpayers failed to claim the credit, prompting the distribution of these payments.

“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” IRS Commissioner Danny Werfel said in a statement.

So, who will receive these payments and how does it work? The likelihood of receiving a check is relatively low. The IRS stated that most taxpayers who were eligible for the federal stimulus payments, also known as Economic Impact Payments, have already received them. The payments will be sent to taxpayers who filed a 2021 tax return but either left the Recovery Rebate Credit section blank or mistakenly reported it as $0 when they were actually eligible.

Eligible individuals do not need to take any additional action. The IRS will automatically send these payments, which should arrive by direct deposit or paper check by the end of January 2025. The funds will be sent to the account listed on the taxpayer’s 2023 return or to the address the IRS has on file.

While the exact amounts will vary, the maximum payment is $1,400 per person. The IRS has posted details on its website regarding eligibility and how the payments were calculated. Additionally, the IRS plans to send separate letters to those who qualify, informing them of the special payment.

For those who haven’t filed their 2021 tax return yet, there’s still a chance to receive the payment. Taxpayers who need to claim the Recovery Rebate Credit must file a return by the April 15, 2025 deadline. This applies even if their income from jobs, businesses, or other sources was minimal or nonexistent, according to the IRS.

To clarify, there were three rounds of COVID-19 stimulus payments. These payments, which totaled $814 billion, were based on factors such as income, tax filing status, and the number of children or qualifying dependents. The first round, under the CARES Act in March 2020, offered up to $1,200 per filer and $500 per child. The second round, part of the Consolidated Appropriations Act in December 2020, provided up to $600 per filer and $600 per child. The third round, under the American Rescue Plan Act in March 2021, distributed up to $1,400 per filer and $1,400 per child.

{Matzav.com}