Unclaimed Tax Refunds – Introduction
Imagine being owed hundreds, or even thousands, of dollars – and not knowing it.
That’s the situation for nearly a million people in the United States, according to a recent warning from the Internal Revenue Service (IRS).
The IRS says there’s over $1 billion in unclaimed tax refunds from previous years just sitting there, waiting for people to come and get it.
This isn’t a scam. It’s real money. And if people don’t act soon, they might lose it forever.
What’s Happening?
Each year, millions of Americans are owed refunds after filing their tax returns.
Sometimes, though, people don’t file a return – maybe because they didn’t earn much, didn’t realise they could get money back, or simply forgot.
The IRS gives people three years to claim a refund, but after that, it’s too late.
Right now, the clock is ticking for tax year 2020. That’s the year when the pandemic disrupted work, routines, and finances for so many.
But it also means many people may have missed out on refunds because they didn’t file.
The IRS estimates that nearly 940,000 taxpayers are due a refund, with the median amount around $932.
That means half of the unclaimed refunds are larger than $932, and half are smaller. That’s not small change – especially at a time when people are feeling the pinch of inflation.
Why Would People Miss Out?
Many of the unclaimed refunds are from low-income workers or students who didn’t realise they were eligible.
Some may not have filed because their income was below the threshold where filing is legally required.
But even if you’re not required to file, you can still get a refund if tax was withheld from your pay cheque or you’re entitled to certain credits.
For 2020, this includes the Earned Income Tax Credit (EITC) – which can be worth over $6,000 depending on your circumstances.
It also includes pandemic-related stimulus payments that some people may not have received.
The Deadline Is Approaching
The IRS has made it clear: if you don’t file your 2020 tax return by 15 May 2024, you’ll lose your right to the refund.
After that date, the money goes into the U.S. Treasury and you can’t claim it anymore.
To help people, the IRS has reopened online tools to request wage and income transcripts, and they’re encouraging those who may have missed out to speak to a tax professional, even if they think they’re not owed anything.
What Should You Do?
If you didn’t file a tax return for 2020, it’s worth checking whether you should have. Especially if you had a job, even part-time, and had tax taken out.
You can still file a return for free using IRS Free File tools if your income is below a certain level.
You’ll need:
-
Your 2020 income details (like W-2s or 1099s)
-
Social Security numbers for yourself and your dependants
-
Bank account info to receive your refund directly
If you’re missing old paperwork, the IRS can help retrieve your income records. But time is short.
Unclaimed Tax Refunds – Conclusion
This isn’t about loopholes or fancy tax planning. It’s simply about people being owed money and not claiming it.
If you or someone you know didn’t file a tax return in 2020, now’s the time to act.
After May, the money disappears – and there’s no going back.
Final Thoughts
If you have any queries about this article on unclaimed tax refunds, or tax matters in the United States then please get in touch.
Alternatively, if you are a tax adviser in the United States and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.