Unclaimed IRS Stimulus Checks: A Comprehensive Analysis

Millions of Americans were impacted by the severe financial crisis brought on by the COVID-19 outbreak. As part of a larger attempt to lessen the economic effects of the pandemic, the U.S. government responded by introducing a number of economic relief initiatives, including stimulus cheques. Under the Trump and Biden administrations, the Internal Revenue Service (IRS) disbursed these stimulus payments, often referred to as Economic Impact Payments (EIPs), in multiple rounds. However, a sizable portion of eligible people failed to claim their stimulus cheques, even though these assistance efforts were widely distributed. The reasons behind unclaimed stimulus cheques, the effects on impacted parties, the IRS's attempts to address the problem, and the wider ramifications for economic policy are all covered in this essay.

Why Stimulus Checks Are Used

The purpose of stimulus checks was to directly help people and families who were having financial difficulties as a result of the COVID-19 pandemic's economic disruptions. These payments were included in a number of legislative packages, including the American Rescue Plan in March 2021 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March 2020. These payments were primarily intended to increase consumer spending, assist families in covering essential living costs, and maintain economic viability during a period of extreme financial turmoil.

In 2020, the initial stimulus check was given out, totaling $1,200 for people making up to $75,000 annually ($2,400 for married couples), plus an extra $500 for each dependent under the age of 17. With additional payments for dependents, the second wave, which was distributed in December 2020, offered $600 per person. The American Rescue Plan's third wave offered $1,400 per person, including dependents of any age.

Reasons Why Stimulus Checks Go Unclaimed

For a variety of reasons, a sizable portion of Americans did not claim or receive their stimulus cheques, even though the great majority of them did. The following categories are the primary reasons why IRS stimulus cheques go unclaimed:

1. Eligibility or Ineligibility Misunderstanding

Because they were judged ineligible due to their income levels, tax filing status, or other factors, some people did not get stimulus checks. For instance, stimulus funds were not available to those whose incomes exceeded specific criteria, such as $75,000 for individual taxpayers or $150,000 for couple filers. Furthermore, some married people who filed separately or those with specific tax problems could not have been eligible.

However, in certain instances, consumers might have thought they weren't eligible to receive a check due to misunderstandings regarding eligibility. differing rounds of payments had differing eligibility requirements, and the issue was exacerbated by incomplete or inaccurate information about the distribution of these payments.

2. Not Submitting a Tax Return

Tax returns were used by the IRS to process stimulus funds and establish eligibility. People risked not getting the stimulus payouts if they didn't file tax returns in the years before they were distributed. Individuals with low incomes, the elderly, people with disabilities, and those who had not registered for various reasons were all included in this group.

Based on the most recent tax filing data they had on file, usually from 2019 or 2020, the IRS issued stimulus checks. The payment procedure did not, however, automatically cover people who had not filed their taxes for those years. Some people were able to claim their payouts by utilizing the IRS's non-filer tool or submitting a simplified tax return, but many people didn't know they needed to or couldn't figure out how to proceed.

3. Modifications to Family or Financial Situation

It's also possible that changes in a person's family or financial circumstances prevented them from receiving stimulus cheques. For instance, a person would have qualified for a stimulus check if their income had drastically decreased in 2020 as a result of losing their job or working fewer hours, but the IRS might have utilized out-of-date tax data that did not account for this shift. Additionally, since the IRS's records would not have been updated to reflect these changes, those who had dependents or children after the 2019 or 2020 tax filing might not have gotten the correct amount.

If they failed to submit the required documentation to the IRS, people who had just recently became qualified for the payments because of a change in their family size or income might not have received a stimulus check.

4. Banking and Problem-Solving

Problems with the IRS's postal addresses or banking information were another factor that led to stimulus checks going unclaimed. For those who had filed taxes and supplied banking information, the IRS tried to disburse money by direct deposit. However, payments were not made by direct deposit to those whose account information was inaccurate or out-of-date. In a similar vein, cheques sent to inaccurate or changing addresses were frequently returned to the IRS as undeliverable.

Receiving the stimulus payment necessitated extra actions, such changing their address or banking information with the IRS, for those who had relocated or switched bank accounts after filing their taxes.

5. Families with mixed statuses and undocumented immigrants

Receiving stimulus funds was extremely difficult for families with mixed immigration status and undocumented immigrants. Those who were not citizens or permanent residents of the United States were not eligible to receive the payments under the eligibility conditions. Furthermore, the entire household was frequently ineligible for compensation if one member lacked a Social Security Number (SSN). Due to this, a large number of mixed-status families with one or more undocumented members were unable to receive stimulus payments.

This prompted calls for reform to guarantee that all families could get the pandemic assistance they required, irrespective of their immigration status.

The IRS's Initiative to Handle Unclaimed Stimulus Payments

To address the problem of unclaimed stimulus checks, the IRS adopted a number of actions, especially for those who were qualified but had not filed taxes or were not aware that they needed to claim their payments. Among these initiatives were:

1. The Non-Filer Tool

The IRS developed an online "Non-Filer Tool" to help persons who did not file tax returns. This tool allowed consumers to submit basic information and receive their stimulus cheques. This tool was specifically designed for people whose income was below the filing threshold or who were exempt from reporting for other reasons. The IRS advised anyone who had not filed taxes to use the Non-Filer Tool to collect their payments while its availability in 2020 and 2021.

2. Campaigns for Awareness and Outreach

To increase awareness of unclaimed stimulus checks, the IRS and other federal agencies started campaigns. The purpose of these ads was to educate the public on their eligibility for payments, how to update their banking information or address, and how to file taxes or use the Non-Filer Tool. Reaching out to vulnerable groups, such as the elderly, the poor, and immigrants, to make sure they knew how to pick up their checks was another crucial task for numerous community organizations and advocacy groups.

3. Extended Due Dates

The IRS extended tax return filing deadlines to allow people more time to claim their payments. For instance, the 2020 tax return deadline was repeatedly delayed, enabling those who had not yet filed to do so and receive their stimulus payments. The third stimulus payment was also made available to those who missed the deadline to claim it on their 2021 tax forms.

4. Particular Attention to Vulnerable Groups

Understanding that the pandemic and the difficulties of the stimulus payment process disproportionately affected some vulnerable groups, the IRS collaborated with advocacy groups to make sure these groups got the help they required. Seniors, those with impairments, the homeless, and those without access to technology or the internet were all included in this.

Unclaimed Stimulus Checks' Effect

For those who qualified but were not paid, unclaimed stimulus checks have had serious repercussions. The stimulus cheques were an essential source of income for many, assisting them in paying for necessities like food, rent, and utilities. Many people experienced financial difficulty as a result of missing these payments, which added to the ongoing financial difficulties faced by vulnerable groups.

Furthermore, not claiming stimulus payments made already-existing wealth and income inequities worse, especially for low-income people and communities of color. These groups were more likely to have trouble navigating the IRS system, and many of them were deprived of the relief to which they were legally entitled.

In conclusion

Unclaimed IRS stimulus checks are a major problem in the larger framework of the post-COVID-19 economic recovery. Many people who were qualified for the payments did not receive them, despite the IRS's efforts to resolve the issue through outreach, extended deadlines, and non-filer tools. This problem has several root causes, from misconceptions regarding eligibility to trouble obtaining the resources required to submit a payment claim. Policymakers must close these gaps going forward to guarantee that everyone who qualifies gets the assistance they require during economic downturns.

In the end, the unclaimed stimulus checks serve as a reminder of the value of open communication, effective governmental procedures, and inclusive policies that guarantee financial assistance reaches everyone who needs it most. Future relief initiatives can be more accessible, equitable, and successful in supporting the American people by taking lessons from the difficulties encountered during the pandemic.