The Internal Revenue Service (IRS) has announced that Americans have until April 15 to claim refunds for the 2021 tax year, including some pandemic-era relief payments. According to the IRS, approximately 1.1 million individuals have an estimated $1 billion in unclaimed refunds for the 2021 tax year, which must be claimed by filing a tax return by the specified deadline.
The IRS highlights that taxpayers typically have a three-year window to file and claim their refunds, and if they fail to do so within this period, the unclaimed funds become the property of the U.S. Treasury. This standard timeframe is particularly important this year due to the potential for government pandemic relief payments. Most people eligible for the stimulus checks, known as Economic Impact Payments (EIPs), have already received them. However, some individuals may still be eligible but have not yet filed their taxes for 2021, which were due in early 2022.
Eligibility for these payments involved three rounds of EIPs totaling $814 billion distributed between March 2020 and March 2021, with amounts reaching up to $1,200 per filer and $500 per child initially under the CARES Act. Additional payments included $600 per filer and child in December 2020 and $1,400 per filer and child in March 2021. The IRS confirms that most eligible taxpayers have either received their payments or a Recovery Rebate Credit. This credit serves those who did not receive their full EIPs or missed one or more rounds during the pandemic.
In December, the IRS identified around 1 million taxpayers who failed to claim their Recovery Rebate Credit for 2021, either leaving the required field blank or entering $0. The agency announced plans to notify and send payments of up to $1,400 to eligible individuals via direct deposit or check to their 2023 address, expected by late January.
For those who did not file a return in 2021, there is still a chance to claim the Recovery Rebate Credit by submitting the 2021 tax return by April 15. The IRS urges eligible individuals to file a tax return to access their rebate credit, even if their income was minimal or absent.
Taxpayers can review their EIP amounts via their IRS online account and use it to calculate their Recovery Rebate Credit. To facilitate filing, the IRS advises gathering necessary past information promptly through IRS individual accounts, employers, banks, or requesting transcripts. Written requests, such as Form 4506-T for wage and income transcripts, might take weeks and are suggested as a last resort.
The IRS notes that 2021 refunds may be withheld if individuals have unfiled tax returns for 2022 and 2023, and any refunds due may offset existing federal debts. Status updates for refunds should appear within 24 hours after electronically filing a current-year return, and individuals can track their refund status online.
This tax season is anticipated to be particularly challenging due to workforce and funding reductions at the IRS. The agency recently experienced job cuts as part of government downsizing efforts. Despite prior increases in funding through the 2022 Inflation Reduction Act, cuts persist, potentially impacting customer service, especially with a reduction in the Taxpayer Advocate Service’s staffing.
Taxpayers are encouraged to consult available online IRS resources for assistance before reaching out directly to the agency’s customer service.
