IRS Sends Out Letters to 9 Million People Who May Miss Out in 2021 Tax Credits

Year-end Planning Individuals and families could be leaving thousands of dollars on the table by not claiming 2021 tax credits. The IRS is ramping up outreach to more than 9 million individuals and families who may have yet to receive that money. Here’s how to get started before some key November deadlines. Anita_bonita | Istock | Getty Images

More than 9 million individuals and families could be leaving money on the table by not filing a 2021 federal tax return, according to the IRS.

Last week, the federal tax agency began sending letters to those people it had identified who could be missing out on payments through tax credits that could put money in their pockets.

That money includes the third round of stimulus checks worth $1,400 per person, child tax credits of up to $3,600 per child and the earned income tax credit worth up to $1,502 for childless workers, which goes up to $6,728 for filers with three or more children.

Notably, families who received advance monthly child tax credit payments in 2021 for up to half the value of that credit still have to file to receive the rest of the money for which they are eligible.

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The American Rescue Plan that was enacted in 2021 authorized the stimulus checks through the Recovery Rebate Credit and also made existing child tax and earned income tax credits more generous.

As a result, some individuals and families became newly eligible for the money, including those who do not typically file tax returns due to having little to no income.

In addition, filers may also qualify for two other expanded tax credits: the child and dependent care credit, for up to $4,000 for one qualifying person or $8,000 for two or more qualifying persons; as well as deductions for cash contributions to charity for those who take the standard deduction, up to $300 in donations for individuals and up to $600 for married couples filing jointly.

“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.

Millions of eligible taxpayers fail to claim the credits for which they are eligible every year. A recent report from the Bipartisan Policy Center said that was largely attributable to administrative barriers such as misperceptions about the necessary qualifications and claiming complexity.

The IRS emphasizes that claiming the 2021 credits will not affect eligibility for federal benefits through programs including Supplemental Security Income, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families

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