9 million U.S. households could still be due stimulus money

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With rents, grocery prices and utility bills soaring, many families could use some extra cash. Inflation puts a heavy strain on people’s budgets.

If you’re having trouble and haven’t filed a tax return this year, check your email.

Last week, the IRS began sending letters to the 9 million households who may still be eligible for several lucrative tax breaks, including the third round of stimulus payments worth up to $1,400 for a single person and $2,800 for couples.

If you have not received the full amount of the pandemic-related economic impact payment under America’s $1.9 trillion bailout plan, you may be eligible for the 2021 credit. But you must file a tax return for 2021 — even if you don’t normally file taxes.

The payments were the largest of those sent to Americans under federal agencies Corona aid packages from 2020.

Inflation allows you to withhold more money from the IRS next year

You don’t have to have 2021 income to qualify for the stimulus money. But there are income limits.

The IRS faced a daunting task amid the pandemic to reach millions of people who don’t normally file tax returns. Technically, the stimulus payments were an advance on a loan called a “recovery rebate credit” on Forms 1040 and 1040-SR.

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For the third round of payments, eligible individuals with an Adjusted Gross Income (AGI) of $75,000 or less were eligible for the full $1,400. The cap was $112,500 for individuals filing as heads of household and $150,000 for couples filing together. Your AGI is your gross income less certain adjustments.

Eligible taxpayers could also charge a whopping $1,400 for each dependent. The relief was extended to older relatives, such as dependent college students, disabled adult children, or a parent you support.

How much does raising a child cost?

In addition to the stimulus payments, households filing a 2021 tax return may also be eligible for the Extended Child Tax Credit and Earned Income Tax Credit.

For those without children, the American Rescue Plan nearly tripled the earned income tax credit from $543 to $1,502. The credit can be up to $3,618 for those with one child, $5,980 for those with two children, and $6,728 for those with three or more children.

The child tax credit has been increased to $3,600 for children under 5 years old and $3,000 for children 6 to 17 years old. The credit was not new; Established in 1997, it has always been intended to help families in difficulty. What was different for the 2021 Tax year was the increase by the pre-pandemic maximum of $2,000 per child under age 17.

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“For 2021, for the first time, families can receive the child tax credit even if they owe no taxes and even if they don’t have a job or business,” said IRS spokesman Eric Smith.

Specifically, the IRS urged grandparents, foster parents, and those caring for siblings or other relatives to review their eligibility for the 2021 child tax credit.

The Child and Dependent Care Credit (distinct from the Child Tax Credit) has also been expanded, making more people eligible and increasing the total credit to $4,000 for one eligible person and $8,000 for two or more people.

As the Fed fights inflation, concerns are growing that it is over-correcting

The IRS letters will be arriving in inboxes this month to people who appear to qualify for the credits but have not yet filed 2021 tax returns. The Treasury Department’s Office of Tax Analysis identified individuals who are generally not required to file a tax return because they appear to have very low incomes according to the IRS based on W-2s, 1099s and other third party statements.

“This mailing was designed to reach people who have not filed and who are mostly on modest incomes,” Smith said.

Biden’s bailout made inflation worse but the economy better

To help people file their returns to claim the loan, the IRS said it announced the agency’s Free File program irs.gov will remain open for an additional month, until November 17 at midnight Eastern time. The quickest way to file a tax return and claim these credits is by electronic filing. Individuals with incomes of $73,000 or less can use Free File with branded software.

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The IRS said people who don’t have to file 2021 tax returns — typically people earning less than $12,500, or $25,000 for married couples — can also visit childtaxcredit.gov/file to submit a simple income tax return for 2021.

If you miss the electronic filing deadline, you can still claim the credits by filing a paper statement, although it may take some time for the IRS to come to this. There is still a significant backlog of paper returns. Tax forms can be found at irs.gov/forms or call 800-TAX-FORM (800-829-3676).

Throughout the pandemic, the IRS and Treasury Department have been scrambling to get Covid-related money to some people, particularly those on lower incomes, with limited internet access or who are homeless, according to a recent Government Accountability Office blog post.

This latest effort by these agencies to track down families is urgently needed for those who could certainly use a cash injection as they struggle with soaring consumer prices.

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