Why is the 2021 tax credit still available in 2025?
If you’re curious about why Tax Day 2025 serves as the deadline to claim the Recovery Rebate Credit, even years after the final round of stimulus checks were distributed, it’s due to IRS regulations allowing taxpayers three years from the original filing deadline to claim any refunds or credits from that year. Since the filing deadline for 2021 tax returns was April 18, 2022, Tax Day this year marks the ultimate deadline for that tax year.
This three-year extension will “expire on April 15, 2025,” according to Spivey. “As long as your return is postmarked by April 15, 2025, and you have proof of mailing … you’ll maintain your right to claim that credit.”
Who can access the Recovery Rebate Credit in 2025?
The IRS states you are eligible for the Recovery Rebate Credit if:
- You were a U.S. citizen or U.S. resident alien during the calendar year 2021, and;
- You were not considered a dependent of another taxpayer in 2021, and;
- You possess a valid Social Security number (SSN) or are filing jointly with a spouse who has one, or you are claiming a dependent with a valid SSN or Adoption Taxpayer Identification Number.
Even if you had no income in 2021 or primarily received unemployment benefits that year, you might still qualify for this credit — but you are still required to file your 2021 taxes.
However, certain factors could disqualify you from claiming the credit, including:
- Residency: You are currently a nonresident alien lacking an SSN (and file your taxes using an Individual Taxpayer Identification Number, or ITIN).
- Income thresholds: If you are a single filer with an adjusted gross income (AGI) exceeding $80,000 in 2021, you will not qualify for the credit. The AGI limit is $160,000 for married couples filing jointly and $112,500 for those filing as head of household.
Will I incur a late penalty if I file my 2021 taxes in 2025?
That depends on your situation. The IRS will impose a late filing penalty only if your 2021 tax returns indicate that you owe them money.
If, however, they owe you a refund, Spivey from UC Law explains, “there will be no penalty for filing your tax returns late.”
For instance, if you owed no taxes and were merely claiming your stimulus check, resulting in a $1,400 refund, there wouldn’t be any penalties related to that,” she clarified.
However, if you do owe taxes to the IRS, for example, if you worked in 2021 and chose not to have federal taxes withheld from your monthly paychecks, you will be liable for that percentage of your 2021 income when you file your taxes this year — and you will still owe the IRS that amount in 2025.
“[A late filing penalty] will be a percentage of the amount due based on your final tax calculations,” Spivey mentioned. Yet, she noted it “might still be advisable” to file your 2021 tax return by April 15, even if you owe money, “since you’ll still get credit for that $1,400, which can help offset the amount you owe for that tax return.”
Additionally, the IRS warns that taxpayers looking to receive their 2021 tax refund may not be eligible if they haven’t yet filed their 2022 and 2023 tax returns. If managing IRS-related issues feels daunting, Spivey reassures individuals they’re not alone in this journey and can seek assistance from free or low-cost tax clinics like UC’s Law’s.
“If any issues arise,” she advised, “a clinic that supports low-income taxpayers might assist [you] in reclaiming those funds.”
