Randy J. Elder, CPA, P.C.

$1 billion in unclaimed tax refunds: Could the IRS owe you money?

The IRS reports $1 billion in unclaimed refunds each year. Every time I read that number I am astounded. I would venture to say that most people don’t intentionally leave money on table when it comes to their tax refund but the numbers suggest otherwise. You might be thinking that the amount of these individual unclaimed refunds is so miniscule that people just don’t bother. You know; more hassle than it’s worth. However the IRS estimates that approximately 50% of the unclaimed refunds are for amounts greater than $600. I think most taxpayers would agree that is an amount worth the effort of collecting and would prefer to have the extra $600 in their pocket rather than ‘gifting’ it to Uncle Sam.

Unclaimed refunds

So how does $1 billion in unclaimed tax refunds happen? It seems that many of the unclaimed refunds are the result of a tax credit that can only be refunded when a tax return is filed. In these situations taxpayers believe they are not required to file a return but don’t realize that by doing so they would actually receive a refund. Here are a few scenarios that may make filing a return advantageous when it otherwise would not be required.

If you believe that some of that $1 billion in unclaimed refunds may be yours, you should know that the statute of limitations for a refund is 3 years from the unextended due date of the return. Make sure time doesn’t run out and file before the statute expires. For example, to claim a refund for a 2012 return you will need to file the 2012 return no later than April 15, 2016, or the refund is gone forever.

If you have any questions about tax credits or claiming past refunds please contact me for assistance so you can get the refunds you are entitled to.