Surprise IRS payments going to tax filers

CNN
 — 

Who couldn’t use a little extra cash come January without having to lift a finger?

A million tax filers will soon get a letter from the IRS indicating they have money coming to them because they were eligible to receive the 2021 Recovery Rebate Credit but didn’t claim it on their 2021 federal tax return.

The recovery rebate credit was intended for people who during the pandemic did not receive one or more stimulus payments, which were known as Economic Impact Payments.

“These payments are an example of our commitment to go the extra mile for taxpayers. Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” said IRS Commissioner Danny Werfel 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.”

Payment amounts could be as high as $1,400 per individual (plus up to $1,400 per qualifying dependent) but will vary depending on the filer’s 2021 income and other factors. But, in general, you would not be eligible for any portion of the credit unless your 2021 adjusted gross income was below $160,000 if you were married filing jointly; below $120,000 if you filed as head of household; or below $80,000 if you were a single filer.

It is a refundable credit, meaning you could receive a refund even if you didn’t have any federal income tax liability for 2021.

The agency said the payments, which will total roughly $2.4 billion, should be received in most cases by late January.

They will be made either by direct deposit or by paper check, depending on the filer’s preferred method for getting refunds. “The payment will be sent to the bank account listed on the taxpayer’s 2023 tax return or to the address of record,” the IRS said.

If you’re eligible to get a payment but have closed your bank account since filing your 2023 tax return, the agency added, “the bank will return the payment to the IRS and the refund will be reissued to the address of record.”

The agency also encouraged anyone who has not yet filed their 2021 tax return to do so by April 15, 2025, in order to claim the Recovery Rebate Credit if they’re eligible plus any other refund they may be owed.