IRS to Distribute $1,400 Payments to 1 Million Taxpayers: What You Need to Know

What Happened?

Roughly 1 million taxpayers are set to automatically receive special payments of up to $1,400 from the IRS within the first few weeks of the year. The funds will be directly deposited into eligible individuals bank accounts, or sent via check in the mail.

The IRS said it will distribute around $2.4 billion to any taxpayers who failed to claim a Recovery Rebate Credit on their 2021 tax returns. Individuals who either missed one of the COVID stimulus payments or received less than the full amount were able to claim the credit.

However, on Friday the IRS said that they had discovered many eligible taxpayers had yet to do so.

‘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.

Why it Matters

The IRS went on to say that most taxpayers who are eligible for the federal stimulus payments, also known as Economic Impact Payments, have already received them. The special payments are being sent to 1 million Americans who filed a 2021 tax return but left the data field for the Rebate Credit blank or filled it out as $0 when they were actually eligible to receive the credit.

Those eligible don't need to take any action, as the payments will be sent out automatically this month, and eligible taxpayers should receive a direct deposit or paper check by the end of next month.

While payments vary depending on the individual, the maximum amount will be $1,400. The IRS has also posted their eligibility requirements online and outlined how the payment amount was calculated. Should you be eligible, the IRS will send additional separate letters to your address on file notifying you of the special payment.

How it Affects You

If you are eligible but still have not filed your 2021 return yet, you still might be able to receive the money. You will need to file a tax return and claim the Recovery Rebate Credit by the April 15th, 2025 deadline.

This must be done regardless, even if any income was minimal or nonexistent, according to the IRS.

There were a total of three rounds of stimulus payments to households affected by the pandemic, totaling $814 billion. The IRS based the amounts sent on what taxpayers received on their income, tax-filing status, and their total number of children or qualifying dependents.

In March 2020 at the start of the pandemic, eligible taxpayers received up to $1,200 per filer and $500 per child under the CARES Act. In March of 2021, eligible taxpayers received up to $1,400 per income tax filer and up to an additional $1,400 per child under the American Rescue Plan Act.