IRS Set to Disburse $1,400 Payments to One Million Taxpayers

Approximately 1 million taxpayers will soon receive special payments of up to $1,400 from the IRS. The funds will be directly deposited into eligible individuals' bank accounts or sent via paper checks in the coming weeks. This initiative aims to distribute about $2.4 billion to those who failed to claim a Recovery Rebate Credit on their 2021 tax returns.

Key Takeaways

• Who is Eligible? Taxpayers who filed a 2021 tax return but did not claim the Recovery Rebate Credit.
• Payment Amount: Up to $1,400 per individual.
• Distribution Method: Payments will be made via direct deposit or mailed checks.
• No Action Required: Eligible taxpayers do not need to take any action to receive the payment.

IRS Commissioner Danny Werfel stated, "Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible." This revelation has prompted the IRS to take action to ensure these individuals receive the funds they are entitled to.

How Will Payments Be Distributed?

Eligible taxpayers will receive their payments automatically this month. Here’s how it will work:

1. Direct Deposit or Check: Payments will be sent to the bank account listed on the taxpayer's 2023 return or to the address the IRS has on file.
2. Payment Timeline: Funds should arrive by late January 2025.
3. Notification: The IRS will send separate letters to eligible taxpayers informing them of the special payment.

What If You Haven't Filed Your 2021 Tax Return?

Taxpayers who have not yet filed their 2021 tax return may still be eligible for the payment. However, they must file a tax return and claim the Recovery Rebate Credit by the April 15, 2025 deadline, even if their income was minimal or nonexistent.

Background on COVID Stimulus Payments

The IRS has previously distributed three rounds of COVID stimulus payments, totaling $814 billion. The amounts received were based on various factors, including income, tax filing status, and the number of dependents. Here’s a brief overview of the three rounds:

In summary, the IRS's upcoming distribution of $1,400 payments to a million taxpayers is a significant step in ensuring that those who missed out on previous stimulus payments receive the financial support they need. This initiative highlights the IRS's commitment to addressing the complexities of tax credits and ensuring that eligible individuals are not left behind in the recovery process.

Sources

• A million taxpayers will soon receive up to $1,400 from the IRS. Who are they and why now?, Yahoo.