Unfiled Tax Returns Could Mean You Are Missing Out on Some Serious Cash
Are you interested in receiving an extra $847? That was the median tax refund due for unfiled 2014 returns. Unfortunately, if you never filed your return, you missed your chance to get your refund.
That’s right, the money’s gone. It’s now property of the United States Treasury.
The IRS gives taxpayers three years from the due date (tax day) to file a return and claim a refund. If you don’t file within three years, you forever waive your right to that money.
Over $1 Billion in Unclaimed Tax Refunds
The IRS stated that about $1.1 billion in unclaimed tax refunds was waiting for the 1 million taxpayers who were owed a refund for their 2014 taxes but never filed a return. There is no penalty for filing your tax return late if you are owed a refund.
Next year, the same situation will play out again on tax day. Taxpayers who didn’t file 2015 returns are on the clock, with less than a year to file their taxes and claim their refunds.
Why Taxpayers Fail to Claim Their Refunds
There could be several different reasons why someone doesn’t claim their refund, but they probably don’t realize that they the IRS owes them money. Taxpayers in any of the following situations may not realize that they are owed a tax refund:
- Taxpayers with income below the filing threshold. These taxpayers aren’t required to file, but could still have taxes withheld from their paychecks. To get this money back, you need to file a tax return.
- Taxpayers who are eligible for the Earned Income Credit (EIC). The EIC is a refundable tax credit for low and moderate income taxpayers. Even if you didn’t have any federal incomes taxes withheld from your paycheck, you could still get a refund if you are eligible for the EIC.
- If you are eligible for another refundable tax credit, you could be owed a refund without realizing it. The Additional Child Tax Credit (now part of the revamped Child Tax Credit) and American Opportunity Credit are two common refundable credits.
The lesson here is to always check to see if you are owed a federal tax refund, even if you aren’t required to file a tax return. If you know someone who may be due a refund for 2015 but didn’t file their taxes, let them know that the time to claim their refund is running out.
Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and audit defense. Call us at 248-262-3400 to schedule a consultation with one of our tax attorneys.