Over 9 million individuals and families who may not typically file a tax return — likely because of their low income — were mailed letters from the IRS reminding them of their probable eligibility for several pandemic-era tax credits. Now, one filing deadline is approaching this week.
In an effort to reach the 9 million individuals and families who had not filed a 2021 return, the IRS sent letters in English and Spanish to notify them about three credits: the 2021 recovery rebate credit, the child tax credit (CTC), and the earned income tax credit (EITC). They were among credits that were expanded under the American Rescue Plan Act, P.L. 117-2, in 2021 and other legislation.
In October, the IRS said it would leave Free File open for an extra month, until Nov. 17, so eligible taxpayers can claim their share of these benefits.
While the IRS hopes eligible people file their returns for free by Thursday, "inevitably some people will learn of the opportunity too late," IRS spokesman Eric Smith said Monday. "For them, as has been true, by law, for many years, we remind them that they have a three-year statute of limitations for filing a return and claiming a refund. For a 2021 return, that means that, in most cases, the window closes on April 15, 2025."
Individuals and families often can get these expanded tax benefits even if they have little or no income, so many people who do not normally need to file a tax return should do so this year if they want to file for the credits.
People with incomes of under $73,000 a year can file a return online for free using Free File.
People also can file a 2021 income tax return at ChildTaxCredit.gov. Individuals whose incomes are below $12,500 and couples whose incomes are below $25,000 may be able to file a simple tax return to claim the 2021 recovery rebate credit — which covers any stimulus payment amounts from 2021 they may have missed — and the CTC.
The IRS provided these details of the three credits:
- An expanded CTC: Families can claim this credit even if they received monthly advance payments during the last half of 2021. The total credit can be as much as $3,600 per child.
- A more generous EITC: The law boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children. The credit can be as much as $1,502 for workers with no qualifying children, $3,618 for those with one child, $5,980 for those with two children, and $6,728 for those with at least three children.
- The recovery rebate credit: Those who missed out on last year's third round of economic impact payments (EIP3) may be eligible to claim the recovery rebate credit. Often referred to as stimulus payments, this credit can also be claimed by eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021. The maximum credit is $1,400 for each qualifying adult, plus $1,400 for each eligible child or adult dependent.
Further details on these benefits and others are available in an IRS fact sheet, FS-2022-10.
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.