Why You May Need to File a 2021 Return Even if You Usually Don't Have To

Not filing a return could mean leaving money on the table.

Many Americans must file a tax return by the April deadline each year. Some people, however, don't make enough money to exceed the income threshold where filing a return is required. For those who don't have to submit a 1040 form, not doing so can make life a whole lot easier since IRS forms can be complicated.

During the 2022 tax filing season, however, things are a little different. The tax returns that are being filed this year are for the 2021 tax year. And during that year, Americans became entitled to many different types of COVID-19 stimulus money as a result of the American Rescue Plan Act.

If you didn't get all the stimulus funds that were supposed to be deposited into your bank account during the course of last year, filing a 2021 tax return could be an important financial move.

Why some people who are normally non-filers will need to take a different approach this year

The American Rescue Plan Act was signed into law in March 2021 as one of the first actions taken by the Biden administration. This law provided many different kinds of stimulus relief to help people cope with the continuing pandemic and ongoing government restrictions.

Two of the different types of financial help offered included a $1,400 stimulus check available to each eligible adult and dependent, as well as an expanded Child Tax Credit that provided $3,600 for each child under 6 years old and $3,000 for each older child.

Both the stimulus check and the Child Tax Credit were fully refundable, which means even people who didn't owe much or any money in taxes would be entitled to get this money sent to them. This is different from non-refundable tax credits, which can reduce your tax bill to $0 but not below.

This means even lower-income Americans who normally don't have to file a tax return or who don't pay taxes were still entitled to the stimulus relief the Biden administration authorized. The problem, however, is that the IRS was charged with sending out this money, and they calculated who was eligible for it and determined how to distribute it based on past tax returns.

Filing a tax return is now the only way to receive the stimulus money

Those who hadn't filed recent returns, in other words, may have received an incorrect amount or may not have received any stimulus funds at all. And if this happened to you, you need to file a 2021 tax return in 2022 so you can get the cash that's due to you from the government.

Now, the IRS did provide an opportunity for non-filers to submit a simple form to claim their stimulus funds. It's too late to get your money that way, though, so if you want to get your hands on the cash, filing a tax return is now your only option.

The good news is, the best tax filing software can make it easy to do just that. And there are free filing options for people whose income falls below a certain threshold. You just need to explore what tools will work for you, and get your forms in sooner rather than later so you can get the stimulus checks the government provided to help you through tough times.