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$1 Billion of Unclaimed Tax Refunds Is About to Expire

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The IRS may owe those who didn’t file their 2020 taxes hundreds — even thousands — of dollars, but the deadline to claim that money is fast approaching.

Nearly 1 million taxpayers have yet to submit their 2020 taxes, which were due in May 2021. As a result, the IRS is holding over $1 billion worth of unclaimed refund money with an expiration date of May 17.

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” said IRS Commissioner Danny Werfel in a recent statement. “Taxpayers should start soon to make sure they don’t miss out.”

How much money the IRS may owe you

The median unclaimed tax refund amounts to $932 per person (excluding tax credits). However, the IRS won’t be sending this money out automatically. If you are owed an old refund, you will need to file back taxes to claim it before the deadline.

Those back taxes for tax year 2020 must be postmarked by May 17, 2024. Missing this deadline means that your refund will disappear; after three years of a tax refund going unclaimed, it officially “becomes property of the U.S. Treasury,” according to the IRS.

Typically, the deadline to claim old tax refunds is in April, but the tax filing deadline for 2020 taxes was pushed into May 2021 because of the pandemic. Hence the May 17 deadline.

The states with the largest median tax refunds waiting to be claimed include:

  • Pennsylvania: $1,031
  • New York: $1,029
  • Maryland: $991
  • Rhode Island: $986
  • New Hampshire: $982

Idaho has the lowest median refund, at $761.

Some taxpayers could lose out on a lot more refund money than that. Many low- and middle-income folks may also be eligible for the earned income tax credit for 2020. That year, the EITC was worth as much as $6,660 depending on a household’s income and dependents.

Additionally, those who didn’t receive their full $1,200 stimulus check from March 2020 or the $600 check from December 2020 may be eligible for the recovery rebate credit, which is a refundable tax credit for up to the full amount of the stimulus payments that year.

Both of those credits must be claimed by the same deadline, which marks the last chance for taxpayers to get the 2020 stimulus money if they haven’t already.

(These tax credit are refundable and usually included in your total tax refund, but in calculating the typical unclaimed refund amount, the IRS excluded tax credits. That means that by missing the deadline, some people could be leaving over $9,000 on the table.)

How to claim your 2020 tax refund

To claim your tax refund, you will need to file back taxes for 2020. According to the IRS’s website, you can “file your past due return the same way and to the same location where you would file an on-time return.” There are online filing exceptions for IRS Free File and the agency’s new Direct File pilot program.

Some tax software programs will allow you to file previous years’ tax returns but may require you to print out your returns and file by mail (or purchase a version of the program for the previous year you need to file). Tax professionals at brick-and-mortar tax prep companies, such as H&R Block or Jackson Hewitt, can help you as well.

In short, filing back taxes will likely take a little more leg work than filing the current year’s taxes.

Here’s what you need to do:

  • Gather your income information. Review your documents to determine what you have and what is missing for 2020. The specific documents needed will depend on the type of income received that year, such as W-2s for employee wages, 1099-MISCs or 1099-NECs for gig or contract work, and 1099-INTs and 1099-DIVs for interest or dividend income.
  • Request your tax transcript for missing income information. If you can’t find all your 2020 tax information, you can obtain your tax transcript for free from the IRS. Simply create or log in to your IRS account online and request a wage and income transcript, which will include the W-2 or 1099 information you need to complete your return.
  • Use the correct forms for your return. When filing your back taxes, make sure that you are using the correct year’s form. You may need 2020’s 1040, 1040-SR or 1040-NR forms. These are searchable in the IRS’s form archive.
  • Mail your return to the proper IRS location. After completing your 2020 tax return, you will need to sign and mail it to the appropriate IRS location. The mailing address for your return depends on where you live. If the IRS has sent you specific filing instructions by mail, follow those.

For further assistance with your back taxes, you can call the IRS’s toll-free number, 800-TAX-FORM or visit a local taxpayer assistance center.

Keep in mind that even if you are owed a 2020 tax refund, it might not result in a nice check in the mail. The IRS says that the refund may first be put toward outstanding tax bills from other years, unpaid child support payments or past-due debts owed to the federal government.

And if you owe the IRS money from 2020, you might need to pay penalties on top of the past-due amount.

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