If you were eligible for the 2021 Recovery Rebate Credit but didn’t claim it on your tax return, you might be in for a pleasant surprise. The IRS recently announced that special payments will be issued this month to more than one million taxpayers who missed out on the credit.
What Is the 2021 Recovery Rebate Credit?
The 2021 Recovery Rebate Credit is part of the pandemic-related Economic Impact Payments (EIPs), often referred to as stimulus payments. It allowed taxpayers who didn’t receive the full third-round stimulus payment in 2021 to claim the difference on their tax return. Eligibility was based on income, filing status, and other factors, such as dependent status.
Totaling $2.4 billion, the maximum payment is $1400 per individual and $2800 per married couple. This means a family of four, a married couple with two qualifying dependents, could receive up to $5800.
Who Is Eligible for These Special Payments?
The IRS has identified over one million taxpayers who either didn’t file a 2021 tax return or missed claiming the Recovery Rebate Credit when they did. These individuals are eligible for refunds, which will be issued automatically starting in January 2025.
- Eligibility Criteria: The full credit is available to individual taxpayers with an adjusted gross income (AGI) of up to $75,000 and to married couples filing jointly with an AGI of up to $150,000 for 2021.
- Phase-Out Limits: The credit begins to decrease for incomes above these thresholds and is completely phased out for individuals earning $80,000 or more and for married couples earning $160,000 or more.
If you believe you qualify but didn’t file a 2021 return, it’s essential to act now. The IRS has extended the deadline to claim the Recovery Rebate Credit to April 15, 2025.
Why Would You Have Missed Out on the Credit?
There are several reasons why you may not have received the credit, including:
- You didn’t file a 2021 tax return.
- You didn’t realize you were eligible for the Recovery Rebate Credit.
- You made errors calculating the credit on your return.
The IRS has reviewed records to identify eligible taxpayers who were overlooked and is working to ensure they receive their due payments.
What Should You Do If You Qualify and Haven’t Filed a 2021 Tax Return?
If you didn’t file a 2021 return and believe you may qualify for the credit, here’s what to do:
- Check Your Eligibility: Visit the IRS website or reach out to us to determine if you qualify for the Recovery Rebate Credit.
- File a 2021 Tax Return: Use Form 1040 or 1040-SR to claim the credit. Ensure your return is filed by April 15, 2025.
- Double-Check Documentation: Gather any information related to your 2021 Economic Impact Payment to ensure accuracy.
What If You’re Unsure About Your Eligibility?
Properly claiming tax credits and refunds can be complicated. If you’re unsure about your eligibility, need assistance filing a 2021 return, have questions, contact us today to learn how we can help.