The IRS said it has nearly $1.5 billion in unclaimed tax refunds — and the tax agency is urging people to act before April 18 to claim any funds due to them.
The unclaimed refunds come from about 1.5 million taxpayers who didn’t file tax returns in 2018, the agency said. Because there is a three-year deadline to apply for the refunds, most taxpayers’ window to receive the money will close on April 18, this year’s federal tax filing date. People in Maine and Massachusetts have until April 19, 2022 to claim refunds due to the two states’ Patriots’ Day holidays.
The median of unclaimed tax refunds is $813 — meaning half of the unclaimed refunds will be under $813 and half will be over, the IRS said.
While the majority of Americans file annual tax returns, there are some people who don’t have to. These are typically low-income households – for example, those earning less than the standard deduction generally do not need to file a declaration. For the 2021 tax year, the standard deduction is $12,550 for singles and $25,100 for married couples.
According to an estimate by the Center on Budget and Policy Priorities, there are an estimated 12 million Americans who don’t file annual tax returns. The IRS has been trying to reach these non-filers for the past two years because many of the federal government’s stimulus efforts — from stimulus checks to the early child tax credit payments — have relied on a taxpayer’s annual tax return.
If the money is not claimed by April 18, the refunds will become the property of the US Treasury Department.
How to request a refund
First, the refunds are tied to individuals who did not file a return in 2018 — meaning taxpayers who already filed for the 2018 tax year are not eligible for the unclaimed refunds.
The first thing you need to know about applying for a refund is that you need to file a 2018 tax return.
“We want to help people get those refunds, but they need to file 2018 tax returns before this critical deadline,” IRS Commissioner Chuck Rettig said in a statement.
You must file a paper statement with the IRS center listed on the last page of the current Form 1040. This is organized by state, so for example taxpayers in Alabama, Georgia and several other southern states should submit their returns to an IRS office in Kansas City, Missouri.
Only tax forms for 2019 and later can be filed electronically, the IRS said in its statement.
This paper requirement could be a disadvantage as the IRS has warned that filing on paper can cause delays in processing. Since these returns must be opened by hand, it is more time consuming for the agency to send out paper returns. This year is the IRSSubmit their 2021 tax return electronically to ensure speedy processing.
Refunds may be withheld
Finally, the IRS warns that people whose 2018 refunds are unclaimed may withhold their checks if they have not yet filed their 2019 and 2020 returns.
Additionally, 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 settle past-due child support payments or past-due federal debt, including student loans.
Low- and middle-income families may be eligible for larger refunds if they claim and qualify for the earned income tax credit, the IRS said. That loan in 2018 was worth up to $6,431, the agency found. Also known as an EITC, this tax credit is based on the number of children in a family and their filing status.
For example, a couple applying with three or more children may qualify for the EITC if they earn less than approximately $54,800. However, that income limit drops to about $49,100 for single taxpayers with three or more children.