As we navigate this tax season, several factors can influence your tax liability and overall finances. One such factor is the potential for a stimulus payment for eligible Americans.
The Internal Revenue Service announced on December 2024 that it would be distributing about $2.4 billion − up to $1,400 per individual − worth of stimulus checks to U.S. taxpayers who did not claim the Recovery Rebate Credit on their 2021 tax returns. (1)
Key Eligibility Criteria:
– Filed a 2021 Tax Return: You must have filed a 2021 tax return. (2)
– Eligibility for Recovery Rebate: You must have been eligible for the Recovery Rebate Credit in 2021. (2)
– Incorrectly Reported Credit:
- You left the Recovery Rebate Credit field blank on your 2021 tax return. (2)
- You entered $0 in the Recovery Rebate Credit field, even though you were eligible for the credit. (2)
If I Qualify for a Stimulus Payment, How Will I Receive It?
If you qualify for the Recovery Rebate Credit you don’t have to take any action. The IRS plans to send letters to eligible taxpayers notifying them of the special payment. The payments will go out automatically this month and should arrive by direct deposit or check by late January. They’ll be sent to the bank account listed on the taxpayer’s 2023 return or to the address the IRS has on file. (2)
Considerations On How to Use Your Stimulus Check:
This unexpected sum can have a significant impact on your financial health. Consider these options:
- Bolster Emergency Savings: Build a strong financial foundation by increasing your emergency funds.
- Pay Down High-Interest Debt: Reduce the burden of credit card debt or other high-interest loans.
- Make a Meaningful Investment: Consider investing your stimulus check in your future, such as retirement savings or education for a child or grandchild.
We Can Help:
This whole situation reminds us how important it is to stay on top of things when it comes to finances.
- You never know when there might be unexpected opportunities or changes that could impact your money.
- Keeping your tax records organized is key, especially since things like these stimulus payments often depend on your recent tax filings.
In addition to checking your eligibility, as financial professionals, we can help you explore ways to use your stimulus check to potentially reach your long-term financial goals. Schedule a meeting today to discuss your options!
Sources:
-
(1) Cross, Greta. “Taxpayers Could Get a $1,400 Stimulus Check by the End of This Month. Are You Eligible?” USA Today, Gannett Satellite Information Network, 24 Jan. 2025, www.usatoday.com/story/news/2025/01/24/irs-1400-dollar-stimulus-checks-2025/77931265007/
-
(2) “IRS Is Sending out Automatic Stimulus Payments. Who Is Getting Them?” WTTW News, news.wttw.com/2025/01/13/irs-sending-out-automatic-stimulus-payments-who-getting-them. Accessed 28 Jan. 2025.
We do not provide tax or legal advice or services. Always consult with qualified tax and legal advisors concerning your circumstances. We are not affiliated with the IRS or any other governmental agency. Investing involves risk, including possible loss of principal. No investment strategy can ensure financial success or protect against losses. This information is being provided only as a general source of information and is not intended to be the primary basis for investment decisions. It should not be construed as advice designed to meet the particular needs of an individual situation. Please seek the guidance of a financial professional regarding your particular financial concerns. Consult with your tax advisor or attorney regarding specific tax issues.
