Did you know that each year the IRS has upwards of a billion dollars in unclaimed tax refunds? That’s right, a billion dollars of money that is owed to taxpayers across the country. How does this happen?
In most cases, refunds go unclaimed because taxpayers who don’t make a lot of money and may not meet the IRS requirement to file a tax return are actually entitled to a tax refund, but since they never file a return, they can’t claim that money. Another tax break that taxpayers miss is the Earned Income Tax Credit, or EITC. This is a tax credit, not deduction, that’s available to many lower-income taxpayers, and this credit often goes unclaimed.
If this sounds like you, it’s time to get to work so can you claim what’s rightfully yours this tax season and even for previous tax seasons. One thing to keep in mind is the IRS places just a three year window on claiming these past refunds. After that time elapses, the money goes to the U.S. Treasury. You’ll also want to note that if you want to claim a refund from two or three years ago, you’ll likely need to make sure all subsequent year tax returns have been filed in order for the funds to be released.
Unfortunately, if you’re thinking about claiming a potential refund that may be a few years old, that can be troublesome if you haven’t kept good records. As you know, preparing a tax return takes a little time and usually requires some documentation that records your income and taxes paid throughout the year, so coming up with W-2 and 1099 forms a few years after the fact may be an issue.
This is why it’s important to keep all tax-related documents in a safe place for at least 3-7 years. So, check your file cabinets and dig through the box of papers in the closet to see if you can come up with what you need. If you can’t, the next step would be to contact your employer at the time in question and request copies of the forms. If these efforts are unsuccessful, you can get a free transcript showing information from these year-end documents by ordering it on IRS.gov, filing Form 4506-T, or by calling 800-908-9946.
Keep in mind, the average unclaimed tax refund is over $600. So, think about your situation and decide if doing a little legwork to track down documentation and filing old tax returns is worth it. Also, don’t miss out on your tax refund for the present tax year. TurboTax can help you easily file your taxes for this tax year as well as previous tax years.