The IRS announced in December 2024 plans to issue automatic payments to eligible individuals who did not claim the Recovery Rebate Credit (RRC) on their 2021 federal income tax returns. The IRS announcement was a result of the IRS’ review of internal data showing many eligible individuals who filed a 2021 federal income tax return did not claim the RRC.
The RRC is a refundable tax credit for individuals who did not receive one or more Economic Impact Payments (EIP) during 2020 and 2021, also known as “stimulus payments”. Refundable tax credits are preferences in the Internal Revenue Code that offset tax liability and even enable individuals to receive a payment if the value of the tax credits exceeds their annual federal income tax liability.
For individuals who filed a 2021 federal income tax return and who were eligible for the RRC but who did not claim the RRC on the return, no action is necessary. These individuals should have already received their stimulus payment. Starting in late December 2024 and ending in late January 2025, the IRS sent payments via automatic direct deposit or sent by mail a paper check. Eligible individuals should have also received a separate letter notifying them of the stimulus payment.
The payments vary in amount depending on several factors (for example, adjusted gross income) with the maximum payment of $1,400 per individual and $2,800 per married couple. The estimated amounts of payments going out was $2.4 billion. These payments for the 2021 RRC went only to individuals whose IRS data demonstrates that the individual qualifies for the RRC. Qualified individuals are those who filed a 2021 federal income tax return but the data field for the RRC (line 30 of the 2021 Form 1040 (“Recovery rebate credit” – see below) was left blank or was filled out as $0 when the individual was in fact eligible for the RRC.
Individuals Who Did Not File Their 2021 Federal Income Tax Return
For individuals who, for one reason or another, did not file a 2021 federal income tax return, they may be eligible for a refund if they file and claim the RRC. As a refundable credit, the RRC is available to any individual no matter whether or not the individual has a 2021 federal tax liability. The deadline for filing the 2021 federal income tax return to claim a refund is April 15, 2025. That is because April 15,2025 is the end of the three-year statute of limitation for claiming a refund on a 2021 federal income tax return (the due date for filing a 2021 federal income tax return was April 15, 2022).
Individuals can download 2021 IRS filing forms and instructions from the IRS Web site in order to prepare their 2021 federal income tax return by going to: https://www.irs.gov/forms-pubs/prior-year. A portion of the 2021 Form 1040 is shown below. Note line 30: “Recovery rebate credit”.
Note that the 2021 individual federal income tax return cannot be filed electronically. A paper income tax return must be prepared and mailed. The return must be postmarked no later than 11:59 pm April 15, 2025. Those individuals living in states with state and local income taxes and who did not file a 2021 state income tax return should consider filing a state income tax return in addition to filing a federal income tax return.
Copy of Page 2 of the IRS Form 1040 for the year 2021.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER®, Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019