Did you know that the IRS has reported an upwards of a billion dollars in unclaimed tax refunds? That’s right, a billion dollars of money that is owed to an estimated 1.3 million taxpayers across the country who have yet to file their 2017 tax return. How did this happen?
In most cases, refunds go unclaimed because taxpayers who don’t meet the IRS income threshold 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 portion of unclaimed tax refunds that the IRS may be holding onto may include the Earned Income Tax Credit, or EITC. This is a tax credit, not deduction, that’s available to many lower to moderate income workers, and this credit often goes unclaimed. The maximum credit for EITC for 2017 was worth as much as $6,318.
If this sounds like you, it’s time to get to work so can you claim what’s rightfully yours. One thing to keep in mind, is the IRS places just a three year window on claiming these past refunds. The deadline to claim tax year 2017 refunds (the tax return you typically would have filed in 2018) was extended from April 15, 2021 to May 17, 2021. 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. If you haven’t filed a 2017 tax return you should quickly file to potentially get this refund.
If you’re thinking about claiming a potential refund that may be a few years old, you will have to pull together some documentation that records your income and taxes paid throughout the year as well as deductible expenses. Coming up with W-2 and 1099 forms a few years ago may take some time. This is why it’s important to keep all tax-related documents in a safe place for at least 3-7 years.
If you can’t locate your documents needed to file your 2017 taxes, the next step would be to contact your employer or payer at the time in question and request copies of the forms. If these efforts are unsuccessful, you can get a free transcript from the IRS showing information from these year-end documents by ordering a free wage and income transcript at IRS.gov using the Get Transcript Online tool or by filing Form 4506-T to request a wage or income statement.
Keep in mind, the IRS estimates the midpoint for the potential refunds for 2017 to be $865, which means that half of the refunds are more than $865 and half are less.
So, think about your situation and decide if doing a little legwork to track down documentation and filing old tax returns is worth it. You may have a refund for previous years coming your way. 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. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your entries.