Individuals and families across America could receive mail reminding them to collect federal stimulus checks before it is too late. Over 9 million households have not collected various tax credits and stimulus checks for various reasons. The Internal Revenue Service has sent reminders and given them a simple option to claim their dues by filing a simple income tax return for 2020.
Millions of Americans who do not file federal or state income tax returns are eligible for thousands of dollars
The IRS will keep its Free File program open till November 17, 2022. Eligible people will then have a whole month to claim the pandemic stimulus payments and also the Child Tax Credit.
These individuals and households missed out on past opportunities to collect the multiple stimulus checks and could be in line for the CTC stimulus check, the Recovery Rebate Credit for 2021, and also the EITC, the Earned Income Tax Credit.
Low Income More Likely To Miss Out On Stimulus Checks
The government had difficulty in ensuring that the massive pandemic stimulus bill reached the very people it was intended to help. There was no initial way to accurately assess that the payments reached the class of people that it was primarily intended for.
The IRS relied on the only data they had access to, the income tax filers. They constituted households of an income level that was higher than the lowest earners in society and families whose income was so low that they did not need to file income tax returns.
Around 28.22% of households have annual family incomes of less than $25,000, the minimum amount for joint filers to file returns. It was obvious that the IRS have no access to the data of such households and a substantial percentage of people in this income bracket missed out on the stimulus checks and the Child Tax Credit payments.
The IRS is also barred from asking people their sex or race in most situations, or from obtaining data from other federal agencies.
Economists had discovered that many beneficiaries of the CARES Act passed under Donald Trump benefitted even millionaires and families whose earnings were way above the normal middle-class income.
On the other hand, millions of low-income individuals and households were left out of the payment as they remained off the records of the IRS, the authority tasked will deciding who got paid.
The Black and Latino communities were also the most affected and the numbers were way disproportionate to white households. Many did not have access to information that they were eligible for the payments, or they had to apply for it. Even those who knew that they came within the purview of the payments did not have access to the means to file their returns. Education played a big factor in this inconsistency.
The tax code never said that the stimulus checks or the Child Tax Credits were for white people. But it has been designed in such a way that Black and Latino families are less likely to get the stimulus checks.
The US tax code indirectly benefits wealthier and white taxpayers. For instance, the federal government had a policy of refusing to back mortgages in Black and colored neighborhoods, known as redlining. This lowered the value of property in such neighborhoods for generations.
As a result, the value of homes in white-dominated areas increased disproportionately. The higher property values have also translated into bigger tax breaks on interest payments for home mortgages.
These racial disparities from other rules persisted in the pandemic stimulus checks and the Child Tax Credit stimulus checks. This was admitted by a top Biden administration official at a House hearing in June 2021. There has been a suggestion to study potential inequality in the first two rounds of stimulus payments by making it easier for federal agencies, including the Census Bureau, to share demographic data with the tax authorities to enable them to pinpoint gaps in federal support to communities.
Exactly A Month To Go For 9 Million To Federal Claim Stimulus Checks
Around 165 million Americans were eligible for the initial 3 rounds of the stimulus checks authorized by Congress since the COVID-19 pandemic started. But both treasury and IRS data suggest that between 9 and 10 million people might have missed out on these payments for multiple reasons.
But they have a month more under the extension of the period enabled by the federal authorities. The federal government has failed to ensure that the stimulus checks and the expanded Child Tax Credit payment reach those with low incomes. The enhanced payment of the Child Tax Credit was part of the American Rescue Plan Act signed by President Biden in March 2021 within weeks of assuming office.
The authorities say that many families are yet to collect up to $3,600 in child support payments that were partially paid as monthly stimulus checks between July and December 2021.
Chuck Rettig, the IRS Commissioner has said that qualifying individuals and households who are in line to receive tax benefits will have to file their 2021 federal income tax return to claim their stimulus check. He said that the authorities do not want people to miss out on the November 17 deadline.
The IRS said on Thursday that it will be sending out a letter to those who qualify but have not claimed their money. The letters will be printed in Spanish and English and will outline the requirements to be eligible for the earned income tax credit, the Child Tax Credit, and other federal stimulus checks.
Individuals with very low income, mainly individual filers earning below $12,500 and joint members earning below $25,000 are not required to pay taxes and have remained outside the radar of the IRS.
They need to file a simple income tax return on the IRS tool, the Free File Program, which will remain open until November 17 to help people claim the payments without any charge. The Commissioner stressed that the authorities do not want people to overlook the tax credits and the letters will serve as the final reminder to families of the potential eligibility to get thousands of dollars and the steps they need to take to get them.
