According to a June release from the IRS, almost $1.5 billion of refunds remain unclaimed for tax year 2019. According to IRS Commissioner Werfel:
“Time is running out for more than a million people to get their tax refunds for 2019. Many people may have overlooked filing a 2019 tax return due to the pandemic. We don’t want people to miss their window to receive their refund. We encourage people to check their records and act quickly before the deadline.”
The July 17, 2023 deadline is quickly approaching.
The three-year rule
Refunds have to be claimed within three years or they are forfeited to the government. The unclaimed $1.5 billion comes from over 1 million taxpayers who still haven’t filed returns for the 2019 tax year. Often the people who leave these refunds behind are young adults, college students, senior citizens and low-income taxpayers.
Thankfully, the July 17 deadline represents additional time to claim versus the traditional April 15 deadline due to a filing delay during the pandemic.
How and Why do Refunds go Unclaimed?
Forgetting withholdings. Even if you have very little income, your employer may have taken some money from your paycheck for federal tax withholdings. The only way to get it back is to file a tax return. This impacts part-time employees and students.
Not claiming refundable credits. Many tax credits are “refundable credits.” This means you can receive a refund even if you owe no income tax. Common examples available to students and parents are the earned income tax credit and the premium tax credit.
Missing information. Some people don’t file because they’ve lost the information they need. If the reason you can’t file is because you lost your data, you can request an online transcript from the IRS that will give you your wage, income and other tax information. You can also mail the IRS a Form 4506-T to get paper copies mailed to you. However, this will take between five and 10 business days, so don’t delay.
Fear of penalties. Sometimes taxpayers fail to file old returns because they think the IRS may penalize them. There is no penalty for filing a late return if you are owed a refund.
Send your 2019 return by certified mail early enough that the IRS receives it before July 17. If you need help, please reach out as soon as possible by emailing Wisdom@Wisdomws.com.