The IRS said it has nearly $1.5billion in unclaimed tax refunds – and the tax agency is urging people to take action by April 18 to claim all the money owed to them .
The unclaimed refunds come from about 1.5 million taxpayers who failed to file taxes in 2018, the agency said. Because there is a three-year window to claim the refunds, the window to get the money will close for most taxpayers on April 18, which is this year’s tax deadline for federal taxes. Residents of Maine and Massachusetts have until April 19, 2022 to claim the refunds, due to both states’ Patriots Day holiday.
The median value of unclaimed tax refunds is $813, which means half of unclaimed refunds will be less than $813 and the other half will be more than that, the IRS said.
While the majority of Americans file annual tax returns, some people are not required to. These are generally low-income households – for example, those earning less than the standard deduction generally do not have to file a return. For the 2021 tax year, the standard deduction is $12,550 for single filers and $25,100 for married couples.
There are about 12 million Americans who do not file annual taxes, according to an estimate from the Center on Budget and Policy Priorities. The IRS has sought to reach out to these non-filers over the past two years because many of the federal government’s stimulus efforts — from stimulus checks to advanced child tax credit payments — were based on annual tax filing. a taxpayer.
If the money is not claimed by April 18, refunds will become the property of the US Treasury Department.
How to request a refund
First, the refunds are tied to people who did not file a return in 2018, which means taxpayers who have already filed a return for the 2018 tax year are not eligible for unclaimed refunds.
The first thing to know about claiming a refund is that you will need to file a tax return for 2018.
“We want to help people get these refunds, but they must file a 2018 tax return before this critical deadline,” IRS Commissioner Chuck Rettig said in a statement.
You will need to file a paper return with the IRS center which is listed on the last page of the current Form 1040. This is organized by state, so, for example, taxpayers from Alabama, Georgia, and several other southern states must submit their returns. at an IRS office in Kansas City, Missouri.
Only tax forms for 2019 and later can be filed online, the IRS said in its statement.
This paper requirement could present a downside, given that the IRS has warned that filing on paper can cause processing delays. Since these declarations must be opened by hand, the agency takes longer to send out the paper declarations. This year the IRS isFile their 2021 returns electronically to ensure fast processing.
Refunds may be withheld
Finally, the IRS warns that people who have unclaimed refunds from 2018 may have their checks held if they haven’t yet filed taxes for 2019 and 2020.
In addition to that, the refund will be applied to any amount the taxpayer still owes to a state tax agency or the IRS — and it could also be used to offset overdue child support payments or outstanding federal debts. delinquency, including student loans.
Low- and middle-income families may be eligible for larger refunds if they file and qualify for the earned income tax credit, the IRS said. That credit in 2018 was worth up to $6,431, the agency noted. This tax credit, also known as the EITC, is based on the number of children in a family, as well as their filing status.
For example, a married couple filing jointly with three or more children may qualify for the EITC if they earn less than approximately $54,800. However, this income threshold drops to around $49,100 for single taxpayers with three or more children.