The Internal Revenue Service plans to send letters to more than 9 million individuals and families who qualify for various tax benefits but did not claim them by filing a 2021 federal income tax return. Those eligible in this group can claim some or all of the 2021 Recovery Rebate Credit (RRC), the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC) and other tax credits depending on their personal and family situation. The IRS will be sending out these special reminder letters over the next few weeks.
“The IRS wants to remind potentially eligible people, especially families, that they may qualify for these valuable tax credits,” said IRS Commissioner Chuck Rettig. “We encourage people who haven’t filed a tax return yet for 2021 to review these options. Even if they aren’t required to file a tax return, they may still qualify for several important credits. We don’t want people to overlook these tax credits, and the letters will remind people of their potential eligibility and steps they can take.” These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation. The only way to get the stimulus check is to file a 2021 tax return even if they haven’t been required to file in recent years. Often, individuals and families can get these expanded tax benefits even if they have little or no income.
Treasury’s Office of Tax Analysis identified individuals who don’t typically have a tax return filing requirement because they appear to have very low incomes, based on W-2 1099 forms and other third-party statements available to the IRS. This is part of an ongoing effort to give people their entitled tax credits and a refund. People can file a tax return even if they haven’t yet received their letter, as there is no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline. The fastest and easiest way to get a refund is to file an electronic return and choose direct deposit.
People can also visit ChildTaxCredit.gov to file a 2021 income tax return. 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 Child Tax Credit. Individuals do not need to have children in order to use Get Your Child Tax Credit to find the right filing solution for them.
The three credits include:
- An expanded Child Tax Credit: Families can claim this 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 Earned Income Tax Credit 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: For those who missed out on last year’s third round of stimulus checks, this credit can also help eligible people whose Economic Impact Payments (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.
Besides these three credits, many filers may also qualify for two other benefits with a tax return filed for 2021:
- An increased Child and Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
- A deduction for gifts to charity: Most tax filers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individuals can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.