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Saturday, February 4, 2023

Deadline Passes For Over 9 Million For Missing Third Stimulus Check And The Child Tax Credit

The Internal Revenue Service has been alerting close to 10 million people that they are in line to claim thousands in federal stimulus checks including the third stimulus check and the expanded Child Tax Credit stimulus check. The November 17 deadline has passed after it was extended multiple times, the last time on October 15 this year.

The IRS began mailing the letter to the millions who have failed to collect their stimulus check by filing a simple income tax return on a tool set up by the authorities. The remainder was for the stimulus checks, the Earned Income Tax Credit, and the expanded Child Tax Credit stimulus check.

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The IRS began sending out letters to over 9 million potentially eligible families to file their simple tax returns for 2021 through the Free File that stayed open until November 17.

These individuals and families appeared to qualify for one or more of the key federal tax benefits but failed to claim them as they did not file their 2021 income tax returns. They will be eligible to claim some or all of the expanded Child Tax Credit, the Recovery Rebate Credit, the Earned Income Tax Credit, and other federal stimulus payments depending on their income, their family members, and their situation.

These special reminder letters arrived in the mailboxes of millions over the past few weeks and were sent by the authorities to individuals and households that the federal authorities deemed as being potentially eligible for the payment.

The IRS Letter Was Mainly Directed At Giving Stimulus Checks To People Who Do Not File Returns

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People who had not filed their income tax returns or are not required to because their Adjusted Gross Income is below the minimum stipulated for filing returns should not file a return to get the payments.

Earlier individuals and families could get their expanded tax benefits, though they might not have an income, or their income might be so low that they would not normally have to file a state or federal income tax return. But they would need to do so for 2021, to be filed in 2022, if they are to claim the substantial benefits.

The mailing list has been put together by the Treasury’s Office of Tax Analysis. They identified individuals who are normally not within the ambit of typical tax filers who have tax return filing requirements due to their low incomes based on the Forms 1099s and W-2 and various other third-party statements that the IRS gathered from various sources.

The letters are similar to the special IRS mailings made in September 2020 that also encouraged 9 M probable non-filers to file their income tax returns for their first stimulus check, or the first of the Economic Impact Payments.

This initiative is part of the continuing efforts made by the federal authorities to encourage individuals and families who are not normally within the ambit of tax returns to look into the possibility of gaining thousands of dollars in rebates and tax credits, which they can receive just by filing a simplified tax return.

Even families and individuals who have not received the letters from the IRS were eligible for filing the returns and claiming the stimulus checks if they had not received them earlier. The IRS has reminded filers that no penalty was levied for any refund claimed on tax returns filed after the normal tax deadline, which was in April 2022.

The fastest and most convenient way that any individual or family can claim a refund was by filing accurate income tax returns electronically and by choosing direct deposit.

The IRS Kept The Free File Tool Open Until November 17, 2022

The stimulus checks that are there for the asking are the expanded Child Tax Credit targeting families with children. This is an old annual federal payout that has been expanded from the earlier $2,000 a year to between $3,000 and $3,600 depending on the age of the child.

Families are eligible to claim benefits for all children below the age of 18. Earlier the payments were given as tax rebates to federal tax filers after they had filed their returns. But to help out families affected by the pandemic, the Biden government made changes to the scheme under the American Rescue Plan Act, which the incoming president signed in March 2021.

There were two significant changes in the CTC stimulus checks. The amount was increased, and the amount was paid out as an advance in the tax year itself. Thus, families who would have normally received the 2021 CTC stimulus checks in 2022 after filing their returns received 50% of the amount in equal monthly payments between July and December 2021.

The Earned Income Tax Credit was a more generous payment scheme from the federal administration. The law gave a boost to the EITC for childless workers. Changes were also made to help out low and middle-income families with children. The credits went up to as much as $1,502 for workers without children, $2,618 for families with one child, $5,980 for families with two children, and $6,728 for families with three children. The last amount is the maximum permissible.

The Recovery Rebate Credit was for those who missed out on the 3rd round of the Economic Impact Payment or the third stimulus check. The credit also helped eligible families whose third stimulus checks were less than the full amount. This included those who welcomed home a child in 2021.

The maximum credit under this scheme was $1,400 per filer and an equal amount for dependents, children, or adults.

Other than these major stimulus payments, many also qualified for a couple of other benefits by just filing their 2021 income tax returns. Families who paid for daycare so that they could work or look for work got a tax credit called the Child and Dependent Care Credit, which was worth up to $4,000 for a single qualifying person and double that for two or more qualifying persons.

Most tax filers are also eligible for standard deduction on eligible cash contributions made in 2021. Married couples filing jointly are eligible for a deduction of up to $600 in donations that have been made in cash while individuals are eligible for a deduction of $300 in donations.

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