What are IRS Bonus Payments in 2024? Know Detailed Info Here

The extra payment that an individual earns other than his/her income can be considered as bonus payments. These payments can be provided under the financial support programs or tax refund or credits to the eligible citizens of the country. However, the bonus payments can be categorized as per refundable and non-refundable payments. For instance, the child tax credit provided to the eligible citizens is non-refundable while the Earned Income Tax Credit is refundable which means even if you do not owe any tax, you can still receive a refund. Through this blog, you will be able to gain knowledge on certain types of IRS bonus payments along with an estimated amount that you are eligible to claim. Continue reading this post, so that you cannot miss any updates.

What are IRS Bonus Payments?

  • The Internal Revenue Service (IRS) issues several kinds of tax refunds or credits and economic relief measures to provide a major financial support to eligible citizens of the United States. The economic relief measures include Economic Impact Payments which are also known as stimulus payment. In addition to it, a taxpayer can also claim certain tax credits including Child Tax Credit (CTC), Earned Income Tax Credit (EITC), Recovery Rebate Credit, Premium Tax Credit and American Opportunity Tax Credit and many more.
  • The economic impact payments were implemented to compensate the financial crisis during the corona virus pandemic that affected millions of citizens of the country. A tax refund is provided to the taxpayer in case of an overpayment in taxes than the federal limit. A taxpayer must file their annual tax returns of previous year in order to claim tax credits or refunds. Let’s take a brief look at the IRS bonus payments and their eligibility criteria to better understand them.

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IRS Bonus Payments 2024 Quick Details

Post title IRS Bonus Payments
Country The USA
Department Internal Revenue Agency
Category Finance
Appliable for Eligible citizens
Kinds Refundable and non-refundable
Year 2024
Official website www.irs.gov

What are IRS Bonus Payments in 2024? Know Detailed Info Here

Economic Impact Payments

During the time of corona virus pandemic, millions of citizens who were affected financially by the pandemic were provided an economic relief under economic impact payments which are also known as stimulus payments. A total of three instalments were distributed spanning from March 2020 to March 2021. During the first payment, an eligible individual claimed a check of $1,200 while a married couple filing jointly received a total of $2,400 payment on qualifying the eligibility criteria. At the time of final stimulus payment in March 2021, an eligible individual was able to claim a check of $1,400 while a married couple filing jointly received a payment of $2,800. Under the EIP, a total of 476 million payments were made with a total of $814 billion were paid to the eligible citizens of the country. As the corona virus pandemic is stable, the IRS has halted the stimulus payments.

About Child Tax Credit (CTC)

The CTC is one of the major tax credits that helps families with qualifying children. The credit currently provides an average of $2,000 per qualifying child. You are able to claim the CTC even if you do not normally file tax returns. However, certain requirements must be qualified in order to be eligible to claim CTC:

  • A child must be under 17 years of age at the end of year.
  • The child must have lived for at least half a year of the tax year.
  • On your tax return, the child must be claimed as your dependent.
  • S. citizenship is required.
  • The child can be your son, daughter, brother, sister, half sibling, foster child, step child, niece, nephew and any other dependent.

The Earned Income Tax Credit (EITC)

Earned income includes all the income and wages that you have earned in a calendar year by working as an employee or self-employed citizen or by a business. The EITC is provided to the citizens with low to moderate income and can be used to reduce the taxes they owe. However, the amount of the EITC may change depending if you have children, any other dependent or are disabled. You can check the maximum credit amount under EITC in the following table:

Qualifying child Amount
0 $600
1 $3,995
2 $6,604
3 or more $7,430

Recovery Rebate Credits

Since the IRS has already distributed three instalments of stimulus checks, the citizens who have not claimed the economic impact payments are eligible to claim recovery rebate credits by filing their tax returns for years 2020 and 2021. Missing first and second stimulus payments can only be claimed on a 2020 tax return while missing third payment can be claimed on 2021 tax return.

Premium Tax Credit

The Premium Tax Credit or PTC is a refundable tax credit responsible for the eligible individuals and their families in helping to cover their premiums for their health insurance purchased through the health insurance marketplace. You will have to qualify certain eligibility requirements in order to qualify for the PTC:

  • A person must have a household income that must not exceed a certain range.
  • A person must not file tax return using the filing status of married filing separately.
  • A person cannot be claimed as a dependent by another person.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit (AOTC) is a credit for a qualified education expanses paid for an eligible student for the first four years of higher education. An eligible student can get a maximum credit up to $2,500 on qualifying the eligibility criteria which is mentioned in the points listed below:

  • A student must be pursuing a degree or other recognized educational credential.
  • A student does not have first four years of higher education at the starting of tax year.
  • A student must be enrolled in at least one academic semester for half time in the beginning of a tax year.
  • A student must not have claimed the credit for more than four tax years.
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