There might be thousands of dollars sitting around for some people who didn’t file taxes this year — and the IRS wants to make sure they’re still able to get that cash relief.
“This year, for the first time, families can get the child tax credit, even if they owe no tax and even if they don’t have a job or business,” IRS spokesperson Eric Smith told Insider.
Last week, the IRS announced that it would begin sending out letters to over 9 million people and families who qualify for tax credits, but haven’t collected them because they didn’t file taxes. Those credits include the enhanced child tax credit, a rebate for the third round of stimulus checks, and the expanded earned income tax credit, which gave millions of Americans the opportunity to save up to nearly $7,000.
“What’s unusual is that they’re trying to reach people who don’t usually file taxes,” Anna Aurilio, federal campaign director at the Economic Security Project, told Insider.
Enhancing and distributing those credits led to millions of children being lifted out of poverty. The monthly checks marked the first time that the US sent out what was essentially guaranteed income to parents, who could receive up to $300 per child. It also marked yet another new logistical challenge for the embattled IRS, which was struggling with understaffing, underfunding, and a pile-up of unprocessed tax returns.
But distributing the checks was remarkably successful: At its peak, 61.3 million children were served in a month, according to a Columbia University analysis. However, while lower or no-income Americans were aware of the credit, non-filers were more likely to have heard “little, or nothing, about the benefit,” according to a June 2021 focus group of 498 people with dependents. Nearly three-quarters of parents who did not file said they were ineligible or weren’t sure if they were even though they did qualify.
“One of the things that we’ve learned over the years is that people who are eligible for things like tax credits, even before the American Rescue Package, are often left out,” Aurilio said. “This is because they didn’t have access to computers. They didn’t have the information that they needed.”
That’s one reason why the letters are going out: “Even if you haven’t filed a return in years and don’t normally file, you may be leaving money on the table,” Smith said.
Eligible Americans can file using an online portal that works on both mobile and desktop devices in multiple languages, or through the IRS free file program.
“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. “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.”
Between the expanded child tax credit, earned income tax credit, and third stimulus check, families could get over $10,000 if they claim their credits, according to Adam Ruben, director of the Economic Security Project.
The letters come as debate over whether to restart the child tax credit begins to pick up yet again. The abrupt end of those checks left some parents concerned about what would come next, especially as inflation soared. Democrats’ razor-thin majority — and need to bow to more centrist elements of the party — meant prior legislation that would have extended the credits met an untimely end.
For now, though, the IRS wants potential filers who never received their checks to try and get the money they’re owed. Free File will stay open until November 17, according to the IRS.
“Even though the usual tax deadline has come and gone, you can still claim these benefits. You’ll still get your refund in full,” Smith said. “But to get them, you have to file a return. The good news is that there’s no penalty for filing late when you’re getting a refund.”