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Tuesday, December 6, 2022

Over 600,000 Third Stimulus Checks Remain Unclaimed: IRS Reminds Filers To Collect $1.6b In $1,400 Economic Impact Payment

The federal stimulus checks have ended in 2021 even as people continue to hurt due to the record inflation rate that has driven up prices of most products, especially essential items such as gasoline, food items, and utilities. But many people are yet to claim their Economic Impact Payments more than a year before it was declared.

The economic impact payments, or the third stimulus checks, were authorized by the American Rescue Act of 2021 signed by President Joe Biden immediately after he came to power. But around 645,000 potentially eligible people had not claimed the stimulus check by the last quarter of 2021. Though some people received their payments later, the numbers are too small.

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The Inspector General for Tax Administration at the Treasury Department reported that the estimated balance remaining with the Treasury was around $1.6B.

The bulk of the targeted population has received their stimulus checks with the IRS sending payments to over 175M taxpayers. But a tiny percentage of people somehow missed the bus and the present tax season may be an opportunity for them to claim their dues.

The IRS has stopped sending stimulus checks, but filers who missed out on the amount of the Economic Impact Payments were entitled to claim the balance payments as a recovery rebate against their 2021 income tax returns.

People Who May Have Missed Out On The Stimulus Check

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People who may still be owed a stimulus check include families who had a child born into the family in 2021 or adopted one in that year. Also, filers who had their income drastically decreased in 2021 could qualify for the stimulus check if they were newly entitled.

A substantial number of people who missed out on the $1,400 stimulus check were individuals with an Individual Taxpayer Identification Number (ITIN) who may have missed out on payment for an eligible dependent. Around 420,000 people who belong to this particular category missed out on the stimulus check.

The ITIN is normally used by workers who do not have a Social Security Number but are mandated to file their income tax returns. Under the American Rescue Plan Act, parents with ITIN and having dependents with a valid Social Security number could receive the payment for their children.

A glitch in the system related to unemployment payment made around 130,000 people miss out on their 3rd stimulus check. The ARPA did not include the first $10200 of unemployment payments from the 2020 taxable income. But filers who filed their returns before that change was implemented missed out on the payments.

These taxpayers should claim the RRC on their 2021 income tax returns the treasury declared. People also missed out on their payments for an unresolved condition in their account with the tax authorities or people who changed their filing status.

People should log into their online account with the IRS to check for details. They have also been advised to double-check their bank account statement in the period starting from the early spring of 2021.

It is vital that taxpayers who did not receive a check, but it is mentioned as paid in the records of the IRS should immediately contact the tax authorities to initiate a payment trace.

States Step In To Fill The Gap Left By The Federal Authorities

Federal stimulus checks are over for now except for the ones that remain unpaid from previous announcements. But around a dozen states have moved in to fill the yawning gap left by the federal authorities as they failed to step in to help people out during the tough times caused by the record inflation this year.

The trillions of dollars that the Federal authorities released into the economy were vital as they saved millions of citizens from starvation and homelessness. These payments proved to be vital not only for the families but also succeeded in saving the economy as well from a deep recession that would have been difficult to contain.

Many families during this period had their income totally cut off, and the stimulus check proved to be the only source of income for many. It helps them put food on the table and help pay off their high-interest debts, utility bills, and rent. Many families even managed to set some money aside during this period for difficult times and this foresight helped them during this inflationary period.

Reasons Behind The Inflationary Spiral

The main reason that experts have agreed about the record inflation figures this year was the disruption in the production and supply chain that was caused due to the pandemic. Factories and supply chains remained shut for months during the lockdown period.

Once the markets opened, it was not easy to set right a system that had stayed shut for so long a period. It created an acute shortage of goods even as the economy shifted its focus from service to goods. It was a classic case of too much money chasing too few goods. Prices were bound to increase.

The war in Europe was the final nail in the coffin. Russia is the third-largest oil supplier in the world producing around 11 million barrels a day. A knee-jerk reaction to the blockade of Russian oil harmed the American economy while Russian oil continues to flow out to many countries who have refused to bow to the NATO-initiated sanction.

 Even core NATO nations like Germany continue to be the biggest importer of oil from Russia while America lost out in the bargain, and their economy took a bad hit.

The successive stimulus check also contributed to inflation but was not as significant as the opposition Republicans claim. People had too much money in their hands while essential goods were scarce including oil and food due to the disruption in the production process and the international oil crisis.

The Federal Reserve has moved in and hopes to rein in the runaway inflation rates with an increase in interest rates, its main tool in the battle. The Fed raised its benchmark rate twice and handed out its first three-quarter point hike in 28 years.

The central bank’s increase is expected to address the worst inflation figures in 41 years. Markets had initially braced themselves for a 50 basis point increase, but the bank then decided to hike it more than expected because inflation remained high. A basis point equals 0.01%.

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