The IRS will send an estimated $2.4 billion to taxpayers who didn’t claim the recovery rebate credit on their 2021 tax returns. About 1 million taxpayers were eligible for the credit but failed to claim it, the IRS said.
The recovery rebate credit is a refundable tax credit for taxpayers who didn’t receive economic impact payments, also known as stimulus payments. These were direct payments from the federal government to taxpayers to combat the financial challenges brought on by COVID-19 in 2020 and 2021.
How much is the tax credit worth?
For 2021 tax returns, the recovery rebate credit amount was $1,400 ($2,800 for married taxpayers filing jointly), plus an additional $1,400 for each qualifying dependent. The credit amount phases out at the following adjusted gross income thresholds (2021 income):
| Filing status | Phase out begins at AGI of… | No credit available above AGI of… |
| Single | $75,000 | $80,000 |
| Married filing jointly or qualifying widow(er) | $150,000 | $160,000 |
| Head of household | $112,500 | $120,000 |
The IRS offered two examples of how the phase-out works:
- A single taxpayer with no dependents and adjusted gross income (AGI) of $77,500 is eligible for a maximum recovery rebate credit of $700 (half the full amount).
- A married-filing-jointly couple with two qualifying dependents and an AGI of $155,000 is eligible for a maximum credit of $2,800 (half the full amount).
To qualify for the recovery rebate credit for tax year 2021, you must have a valid Social Security number and can’t be claimed as a dependent by another taxpayer. See this IRS page for more details on eligibility. (If you’re not eligible for the credit, here are tips on how to build a $1,400 emergency fund in other ways.)
Most taxpayers already received their economic impact payments or recovery rebate credit — but some missed out.
“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.
How to get your tax credit
Taxpayers who filed a 2021 tax return don’t need to do anything. The IRS will automatically process payments and send them via direct deposit or paper checks by late January 2025. The IRS will use the bank account information listed on taxpayers’ 2023 tax return or mail a payment to the address on file. The IRS will also send out letters notifying taxpayers of the automatic payment.
If you have closed your bank account since filing your 2023 tax return, the IRS says you don’t need to take any action. Once the bank returns the payment to the IRS, the IRS will mail it to the address on file.
If you didn’t file a 2021 tax return, it’s not too late. You must file a 2021 tax return to receive the recovery rebate credit, even if you otherwise weren’t required to do so. File your 2021 tax return by April 15, 2025, to claim the credit. Visit this IRS page for more information.
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