The Internal Revenue Service (IRS) has announced that Americans have until April 15 to claim refunds for the 2021 tax year, which includes some payments related to pandemic-era relief. This announcement comes as the IRS estimates that 1.1 million people have approximately $1 billion in unclaimed refunds for that tax year. To secure these refunds, taxpayers must submit their tax returns by the deadline.
According to the IRS, taxpayers typically have a three-year window to file and claim their tax refunds. If they fail to do so within this timeframe, the refund money is transferred to the U.S. Treasury. This standard deadline is particularly important this year due to the government’s pandemic relief payments.
While most eligible individuals have received their Economic Impact Payments (EIPs) from the early days of the COVID-19 pandemic, there are still some who have not. The IRS highlighted that those who did not file taxes in 2021 may wish to reconsider, as they could be eligible to receive these payments.
Three separate rounds of EIPs, totaling $814 billion, were distributed between March 2020 and March 2021 to support households affected by the pandemic. Eligible individuals received varying amounts based on specific legislative acts, such as the CARES Act and the American Rescue Plan Act.
The IRS has discovered that about one million taxpayers who were eligible for a Recovery Rebate Credit did not claim it on their 2021 tax returns. In response, the IRS announced plans to send notification letters and make payments to eligible individuals by late January, either via direct deposit or mailed checks.
Individuals who did not file their tax returns in 2021 might still qualify for the Recovery Rebate Credit if they file by the April 15 deadline. The IRS emphasized the need for eligible taxpayers to file a tax return to claim this credit, regardless of their income levels.
To assist individuals in filing their returns, the IRS suggested starting the process early to gather the necessary information. The agency recommends using its online accounts to access tax records and suggested contacting employers or banks for required documentation. They also advised that written requests for transcripts may take weeks and should be considered a last resort.
Additionally, the IRS warned that refunds for 2021 might be withheld if tax returns for 2022 and 2023 have not been filed. Any refund amount for 2021 will first be applied to any outstanding debts owed to the IRS or other agencies.
The tax season is anticipated to be challenging due to cuts in the IRS workforce and funding, making it difficult for taxpayers to obtain answers to their questions. The cuts include the elimination of over 6,000 positions, as part of efforts to reduce the size of the federal government. Despite previous funding boosts from the Inflation Reduction Act, recent budget cuts suggest staffing challenges may persist.
For taxpayers needing assistance, the IRS advises using its online resources before contacting the agency directly.
