More than 9 million individuals and families could be leaving money on the table by not filing a 2021 federal tax return, according to the IRS.
Last week, the federal tax agency began sending letters to those people it had identified who could be missing out on payments through tax credits that could put money in their pockets.
That money includes the third round of stimulus checks worth $1,400 per person, child tax credits of up to $3,600 per child and the earned income tax credit worth up to $1,502 for childless workers, which goes up to $6,728 for filers with three or more children.
Notably, families who received advance monthly child tax credit payments in 2021 for up to half the value of that credit still have to file to receive the rest of the money for which they are eligible.
The American Rescue Plan that was enacted in 2021 authorized the stimulus checks through the Recovery Rebate Credit and also made existing child tax and earned income tax credits more generous.
As a result, some individuals and families became newly eligible for the money, including those who do not typically file tax returns due to having little to no income.
In addition, filers may also qualify for two other expanded tax credits: the child and dependent care credit, for up to $4,000 for one qualifying person or $8,000 for two or more qualifying persons; as well as deductions for cash contributions to charity for those who take the standard deduction, up to $300 in donations for individuals and up to $600 for married couples filing jointly.
“The IRS wants to remind potentially eligible people, especially families, that they may qualify for these valuable tax credits,” IRS Commissioner Chuck Rettig said in a statement.
Millions of eligible taxpayers fail to claim the credits for which they are eligible every year. A recent report from the Bipartisan Policy Center said that was largely attributable to administrative barriers such as misperceptions about the necessary qualifications and claiming complexity.
The IRS emphasizes that claiming the 2021 credits will not affect eligibility for federal benefits through programs including Supplemental Security Income, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families and the Special Supplemental Nutrition Program for Women, Infants and Children. It also has no effect on the immigration status and benefits, nor the ability to apply for a green card.
How to claim the credits before November deadline
Services to help those who don’t typically file tax returns claim the credits are available — but they come with November deadlines.
IRS Free File will remain open until Nov. 17 — one month later than usual — to allow eligible people to file returns for free through a partnership between the IRS and the tax software industry. To use the service, you must have an adjusted gross income of $73,000 or less.
Additionally, ChildTaxCredit.gov lets individuals and families file a 2021 tax return to get the stimulus checks or child tax credit payments for which they may be eligible. The tool is also available to people without children.
In addition, another tool — GetCTC.org — will let filers use a simplified tool in order to claim the third stimulus checks, child tax and earned income tax credits through Nov. 15. That tool, provided by Code for America, was recently updated to also include the earned income tax credit.
The IRS’ Volunteer Income Tax Assistance Program may assist people who need help navigating the tax-filing process. To qualify for assistance, income restrictions apply.
To be sure, tax filers generally have up to three years from the original filing deadline to claim tax credits for which they are eligible. However, the simplified tools aim to streamline the claiming process for those who don’t typically file. After the November deadline, those who missed out can still file a 2021 tax return.
The IRS urges filers to gather certain forms before claiming to make the process smoother. That includes all W-2s and 1099s. It also includes letters issued by the IRS showing total advance child tax credit payments and total third stimulus checks, formally called economic impact payments. The IRS also provides an online account where people can find the amount of their total child tax credit or stimulus check payments.