With the 2022 tax season already upon us, some taxpayers might be scrambling to figure out how to file their taxes, while others may think they have it all figured out. But even the most experienced filers should not get too comfortable: From child tax credits to stimulus payments, there are a number of new factors to consider when filing your 2021 tax return. The Internal Revenue Service (IRS) appears to be fully aware that this can get confusing, so they're trying to warn taxpayers of certain potential issues months ahead of the April 18 tax deadline. In fact, the IRS just issued a major new warning to taxpayers about one additional payment they likely received from the federal government in the last year. Read on to find out what the agency wants you to know about this before you file your return this year.
The IRS just announced that all of last year's stimulus checks have been sent.
In March 2021, President Joe Biden announced the third and final round of stimulus payments for Americans by signing the American Rescue Plan Act of 2021. Qualifying recipients were eligible for a check worth up to $1,400. Many received their payments earlier in the year, but the IRS had still been sending checks throughout the last few months. Not anymore, however, the agency just released a statement on Jan. 26, announcing that all their checks for this third round had been sent. Through Dec. 31, more than 175 million stimulus payments were sent to individuals and families across the U.S., accounting for more than $400 billion in total funds.
The agency said it is no longer allowed to send third stimulus payments.
Under the American Rescue Plan of 2021, the third stimulus check had to be sent off by Dec. 31, 2021. "The IRS is no longer issuing payments as required by law," the agency confirmed on Jan. 26. If you're missing your check, it could still be in the mail, according to the IRS. This is likely the case if you were issued a Plus-Up Payment. This was an additional payment the IRS sent to individuals who initially received the third check based on information on their 2019 tax return but were eligible for a larger amount based on their 2020 return.
But some people might still be eligible for the third round of payments.
Despite all checks having been sent out, certain people might still be eligible for an additional payment without having already received it, according to the IRS. This is because "third-round Economic Impact Payments were advance payments of the 2021 Recovery Rebate Credit," the agency explained.
Eligible recipients who might not have received their payment or their payment in full includes parents of a child born in 2021 or parents and guardians who added a new qualifying child to their family in 2021. The third-round of Economic Impact Payments would have been based off of their 2019 or 2020 tax return, so the IRS would not have calculated any extra dependents added in 2021 into their earnings.
And if your income changed in 2021, you might also now be eligible for a third stimulus check. This is because the third Economic Impact Payments had specific income caps, and advanced payments would have been based off a filer's 2020 return, not their actual 2021 income. So single filers who made more than $80,000 in 2020 but less than this in 2021 would be eligible for a payment of up to $1,400, as well as married couples who had incomes above $160,000 in 2020 but less than this in 2021 and head of household filers who had incomes above $120,000 in 2020 but less than this in 2021.
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You must claim the Recovery Rebate Credit to get this money now.
If you believe that you are still eligible for a third stimulus payment that you did not receive, you must claim the Recovery Rebate Credit to receive it when doing your taxes this year. "Individuals must claim the 2021 Recovery Rebate Credit on their 2021 income tax return in order to get this money; the IRS will not automatically calculate the 2021 Recovery Rebate Credit," the agency warned.
To claim this credit, you will need to know the total amount of money you did receive from the third round of payments, including any Plus-Up Payments. If you received any form of money for this round from the IRS, you will receive a letter from the agency, called Letter 6476. This can help you determine if you are entitled to and should claim the Recovery Rebate Credit when you file in 2021.
"Most other eligible people already received the full amount of their credit in advance and don't need to include any information about this payment when they file their 2021 tax return," the IRS said.
But your refund could get delayed if you incorrectly claim this credit.
When it comes to claiming more money from the federal government through the Recovery Rebate Credit, you'll need to be extra careful. If you are eligible to claim the credit, you must file a 2021 tax return. But filing this return incorrectly or with errors can result in your entire tax refund being delayed.
"The IRS strongly encourages people to have all the information they need to file an accurate return to avoid processing delays," the agency said. "If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund."
According to the IRS, the amount of your 2021 Recovery Rebate Credit will either reduce the amount of taxes you owe back to the agency or be included as part of your tax refund, if it's more than you owe. "Individuals will receive their 2021 Recovery Rebate Credit included in their refund after the 2021 tax return is processed. The 2021 Recovery Rebate Credit will not be issued separately from the tax refund," the agency explained.