IRS has refunds worth $1.1 billion waiting to be claimed, but the clock is ticking
This is the giving season.
The IRS took your money, and now it’s time to give it back. People are positively giddy about getting a tax refund. Often, refunds are the result of overwithholding, meaning you gave the federal government more money than you owed.
By law, taxpayers have just three years to claim a refund. So April 17 is the last chance to get your money for the 2014 tax year. The IRS says there are about $1.1 billion in unclaimed federal income tax refunds owed to an estimated 1 million taxpayers.
But like the lottery, where you have to play to win, you have to file to collect a refund. Live in Massachusetts and didn’t file for 2014? The median potential refund is $935. In Maryland and Virginia, it’s $853 and $828, respectively. In the District, it’s $850. Wyoming has the largest median refund at $973. Nationwide, the midpoint for the potential refunds for 2014 is $847, which means half of the refunds are more than $847 and half are less, according to the IRS.
So far this year, the average refund is $3,046 and the average in 2014 was $2,797.
Again, the only way you can claim your refund is by filing. By the way, if you have not filed tax returns for 2015 and 2016, your refund could be held up.
“But if you can’t get the other returns filed, make sure you file the one that has an expiration date on it,” IRS spokesman Eric Smith said. And don’t worry, there is no penalty for filing a late return if you’re getting a refund.
Here’s an incentive to file: If you have an outstanding tax debt to the federal or state government, the IRS will snatch the money. And that’s a good thing.
I’ve worked with a number of people who were scared to file a return thinking they owed money. They didn’t. They were shocked to receive hundreds and, in some cases, thousands of dollars in refunds. These same folks sometimes had outstanding federal and state tax debt. The refunds helped make a tremendous dent in the debt they owed. For those with state tax debt, the IRS sent the money directly to the taxing authority.
Refunds can go toward unpaid child support. They can also be used to offset student loans.
Perhaps you’re a student or part-time worker and didn’t earn enough money to be required to file. Yet your employer still may have taken out federal taxes. Many low- and moderate-income workers might have been eligible for the Earned Income Tax Credit. In 2014, the credit for individuals and families with low incomes was worth as much as $6,143, according to the IRS.
I know what you’re thinking: Okay, I need to file, but I don’t have a clue where I put my W-2 or 1099 forms. Of course, you can ask your employer for a duplicate. Or you can order a free wage and income transcript from the IRS. Go to IRS.gov and click the link for “Get Your Tax Record.” If you can’t get your W-2 online, file IRS Form 4506-T to request the transcript. You can also get prior-year tax forms online or call toll-free 800-TAXFORM (800-829-3676). Don’t procrastinate any further. Your prior-year returns have to be mailed.
You can get free taxpreparation help. Click the link for “Free file.” If your income is $66,000 or less, you can get help in filing your federal return and, in many cases, your state return. You’ll see a list of companies offering free software to file.
Depending on your income, you may qualify for free taxpreparation help through various programs. The Volunteer Income Tax Assistance ( VITA) program offers assistance to people who have disabilities, speak limited English or earn $54,000 or less. There is also the Tax Counseling for the Elderly (TCE) program, which is mostly operated by the AARP Foundation Tax-Aide program. Despite the title, help is available to low- to moderateincome taxpayers, not just the elderly, and they specialize in addressing retirement and pension-related issues.
To find a VITA or TCE site near you, call 800-906-9887. Or you can search for locations at IRS.gov. Search for “Find a Location for Free Tax Help.”
If you’ve filed and want to know the status of your refund, go to the IRS website and search for “Where’s my refund?”
So, what happens to your money if you miss the deadline to collect your 2014 refund?
The money goes to the Treasury Department. Although the government can use help in reducing the federal deficit, I’m sure you could put your money to better use.
Michelle Singletary THE COLOR OF MONEY