Personal finance

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Certain tax credits were made temporarily more generous in 2021. For certain people, there still may be time to claim the money, which may add up to thousands of dollars — but some politicians aren’t happy the IRS just reminded Americans about the cash.

The federal agency recently sent letters to more than 9 million individuals and families who may qualify for the tax benefits but who have not yet filed a 2021 federal income tax return.

The more generous credits were authorized through the American Rescue Plan Act, which was enacted in March 2021. That includes stimulus checks of $1,400 per person, child tax credits totaling up to $3,600 per child, and an earned income tax credit of up to $1,502 for eligible workers with no children.

“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 an October statement when the agency first started sending the letters.

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However, Republican leadership of the House Ways and Means Committee recently signaled they disapprove of the IRS’ efforts to raise awareness.

“The suspicious timing of these letters right before an election appears political,” Rep. Kevin Brady, of Texas, who is the Republican leader of the committee, wrote in a Nov. 1 letter to Rettig.

“The extension of time to file seems to contradict typical IRS procedures and is likely to have serious consequences for million of Americans still waiting for tax refunds,” Brady wrote.

November deadlines loom to claim credits

The IRS Free File tool is scheduled to stay open until Nov. 17 for people who still need to file 2021 tax returns. That tool allows people with incomes of $73,000 or less to file their returns for free.

Alternatively, ChildTaxCredit.gov also lets people file their 2021 federal income tax returns. Individuals with incomes less than $12,500, or married couples filing jointly with incomes under $25,000, may be able to file a simple tax return in order to claim the credits.

That includes a tool provided by Code for America, GetCTC.org, that will allow people to claim their 2021 child tax credits, earned income tax credits and third stimulus checks. Notably, that tool has a Nov. 15 deadline.

Tax filers typically have up to three years to file their returns and claim tax credits for which they are eligible. The November deadlines are just for these simplified filing tools.

Who may have missed out on the money

Most individuals and families have received the money for which they were eligible through the enhanced 2021 tax credits.

But those who typically do not file federal tax returns, usually because they have low incomes, may still need to submit their information in order to get the money.

That includes one-time stimulus checks of $1,400 per person.

It also includes an enhanced child tax credit of up to $3,600 for children ages five and under, as well as up to $3,000 for those ages 6 through 17. Up to half of those sums may have been sent to families through monthly payments in 2021. However, parents would still need to file federal tax returns to claim the remaining sums, or the full sums if they did not receive the advance monthly checks.

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More families may be eligible for the 2021 child tax credit, since it was temporarily made fully refundable. Those who don’t owe taxes can still claim it. Moreover, parents with little to no incomes are also eligible.

The earned income tax credit, which is aimed at low- to moderate-income workers, was also temporarily more generous in 2021. For that year, workers with no children may be eligible for a credit of up to $1,502. That goes up to $3,618 for workers with one child, $5,980 for those with two children and $6,728 for three or more children.

In addition to higher sums, the 2021 earned income tax credit was also made available to workers ages 19 and up, rather than the 25-to-64 thresholds in place for previous years.

Why the controversy

In the letter to the IRS, Brady questioned whether the IRS’ 9 million letters were necessary and whether they may contribute to fraudulent claims.

While the IRS also sent out 9 million letters in September 2020 to people who may have missed out on the first stimulus checks, there were some notable differences this time around, according to the Texas Republican.

This time, the November deadline gives filers one additional month to submit their paperwork, Brady wrote. Moreover, the notices reference two additional tax credits, the EITC and CTC, in addition to stimulus checks.

Brady also takes issue with the IRS for waiting four months to ramp up its outreach after the Government Accountability Office made recommendations for how it could improve its communications.

Neither the IRS nor the Treasury Department responded to requests for official comment.

Joe Hughes, federal policy analyst at the Institute on Taxation and Economic Policy, a nonpartisan think tank, said he does not see “anything suspicious” in the IRS’ letter.

“The letter is just informing people that there were some temporary rule changes in 2021 and they have a few more days to apply,” Hughes said.

Moreover, while it is clear the credits were authorized by the American Rescue Plan Act, the communication stops short of emphasizing party affiliation.

“The stimulus checks that Trump sent out literally had his name written on the memo line,” Hughes said. “When the Democrats took control and sent out another round of stimulus checks, they notably did not have President Biden’s name on the memo line.”

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