At the start of the pandemic, the IRS created a simple online form that low-income individuals who typically don’t have to file tax returns can use to provide their contact information to the agency. However, that tool has remained offline since November, even after Congress approved two more rounds of stimulus payments. Now, individuals who have failed will have to file a 2020 tax return to receive the money they owe from the first two stimulus checks and the third. People who used the non-filer tool before it went offline will automatically receive their third stimulus payment without taking any action.
An IRS spokesman told CNN Thursday that there are no plans to bring the tool back, but encouraged staff to file returns so that they can get credit for all three payments, as well as other advanced credits they may be eligible for, like that Earned, can apply for income tax credit or child tax credit.
Filing a tax return ensures families get other benefits they qualify for, like the Earned Income Tax Credit or the Now Expanded Child Tax Credit. However, for someone who hasn’t filed a tax return in years, this can be a challenging process.
Much is at stake as billions of federal dollars are falling short of low-income people in California and across the country. The IRS’s immediate republication of the online tool for non-filers would be a good first step, “said Aparna Ramesh. Senior research manager at the California Policy Lab at UC Berkeley, said in a statement.
The group found that at least 1.5 million Californians could potentially miss $ 3.5 billion in stimulus payments. It is estimated that about 25% of low-income Californians did not receive the money automatically last year.
I’m still waiting for the final lap
Most Americans had their stimulus payments deposited directly into their bank accounts or mailed them without any action. In the weeks since President Joe Biden signed the latest stimulus plan, the IRS has quickly made more than 156 million payments – but those who likely need the money the most may still be waiting.
“I think the IRS has limited resources and has to decide how much to devote to its traditional business areas like processing tax returns and audits, or evolving more into a customer service agency focused on providing services,” said Elaine Maag, a principal research fellow at the Urban-Brookings Tax Policy Center. “It sure doesn’t look like that is the priority if these tools are shut down instead of creating them.”
IRS Commissioner Charles Rettig told lawmakers at a hearing last month that the agency had expanded its reach well beyond its normal contacts to reach people on lower incomes and with “hundreds of local community groups and religious organizations” as well “Thousands of people” have collaborated with homeless organizations. “
A challenging year for the IRS
It’s going to be a challenging year for the IRS, an agency whose budget has slashed about 20% over the past decade and which has outdated technology and fewer staff.
The agency is also grappling with several tax law changes made by the Covid Relief Acts. The bill, passed in March, also instructs the IRS to make regular payments for an expanded child tax credit and waive income taxes on unemployment benefits of up to $ 10,200 laid off in 2020 to help some laid-off workers who are with Their unemployment benefits were faced with surprising tax burdens.
The changes create work for the IRS, accountants and taxpayers. Under pressure from lawmakers, the agency recently extended the deadline for filing taxes to May 17.
“This has been without a doubt the toughest tax season I’ve ever experienced,” said Courtney O’Reilly, director of Tax Help Colorado, an IRS-certified tax help center.
Due to the pandemic, there is a greater need and fewer volunteers, although most of the work is still being done remotely. Helping brand new Filers unfamiliar with the tax system and seeking much-needed benefits over the phone is a challenge.
Taxpayers earning less than $ 72,000 per year can file a federal return for free on a tax advisor website. However, you still need to collect the documents showing your income, an email address and a phone number. New applicants are sometimes reluctant to file a tax return at all because they fear that they could repay more tax than they are supposed to get from the stimulus benefits.
“These new benefits will be very helpful to families, but it’s so hard to make sure they get them to the people who need them most. It takes time to get the foundation in place for support,” said O’Reilly.