Millions of Americans may still be eligible for pandemic-era stimulus payments, but time is running out to claim them. The IRS recently revealed that 1.1 million taxpayers have up to $1 billion in unclaimed refunds for the 2021 tax year. To secure these funds, eligible individuals must file their tax returns by April 15, 2025.
“Under the law, taxpayers usually have three years to file and claim their tax refunds,” the IRS said in a notice last week. “If they don’t file within three years, the money becomes the property of the U.S. Treasury.”
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While this three-year filing window is standard, this year there’s extra motivation due to unclaimed economic impact payments (EIPs), also known as stimulus checks, from the COVID-19 pandemic. The IRS noted that while most eligible taxpayers have already received their payments or recovery rebate credits, some individuals who didn’t file their 2021 tax returns have yet to claim what they are owed.
Who Is Eligible?
The U.S. government issued three rounds of stimulus payments totaling $814 billion to households during the pandemic. These payments ranged from $1,200 per individual and $500 per child in 2020 to $1,400 per person in 2021 under the American Rescue Plan. However, some individuals never received the full payment or missed claiming the recovery rebate credit, which is available for those who did not receive all of their EIPs.
The IRS reported that as of December 2023, about 1 million taxpayers failed to claim the recovery rebate credit on their 2021 returns. These individuals are entitled to up to $1,400 per eligible person, and the IRS will issue payments to those who qualify.
How to Claim the Money
Taxpayers who missed filing in 2021 must submit their returns by the April 15, 2025 deadline to claim any unreceived stimulus payments or credits. “Eligible taxpayers who did not file must file a tax return to claim a Recovery Rebate Credit, even if their income from a job, business or other source was minimal or non-existent,” the IRS advised.
For those who need to gather documents to file, the IRS recommends creating or logging into an IRS online account, requesting missing forms from employers or financial institutions, or ordering transcripts from the IRS.
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What Happens After the Deadline?
After the April deadline, any unclaimed refunds become the property of the U.S. Treasury. This could mean forfeiting not just stimulus payments, but also valuable tax credits like the Earned Income Tax Credit (EITC), which could provide significant financial relief for low- and middle-income earners.
The IRS also warns that refunds for 2021 tax returns may be withheld if taxpayers have not filed returns for 2022 and 2023. Furthermore, any refunds could be applied to outstanding debts such as federal taxes, state taxes, or child support.
The Challenges of This Tax Season
As the tax season progresses, the IRS is facing challenges due to staff and funding cuts. Over 6,000 positions were eliminated in February, and more cuts are expected. The agency has urged taxpayers to utilize its online resources to avoid long wait times when seeking assistance.
Taxpayers are encouraged to file as soon as possible to avoid missing out on potential refunds and credits. Visit the IRS website for more information and to start the filing process.
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