$1 billion in unclaimed refunds can become the US Treasury’s property if the US taxpayers do not act fast. The Internal Revenue Service has announced that over 1.1 million people across the nation have unclaimed refunds for tax year 2021, but face an April 15 deadline to submit their tax returns.
The IRS estimates that more than $1 billion in refunds remain unclaimed by taxpayers who have not filed their Form 1040, Federal Income Tax Return, for the 2021 tax year. The IRS estimates the median refund amount is $781 for 2021. That means half of the refunds are more than $781 and half are less.
Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don’t file within three years, the money becomes the property of the U.S. Treasury.
By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2021. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2021, the EITC was worth as much as $6,728 for taxpayers with qualifying children. The EITC helps individuals and families whose incomes are below certain thresholds.
The thresholds for 2021 were:
$51,464 ($57,414 if married filing jointly) for those with three or more qualifying children;
$47,915 ($53,865 if married filing jointly) for people with two qualifying children;
$42,158 ($48,108 if married filing jointly) for those with one qualifying child, and;
$21,430 ($27,380 if married filing jointly) for people without qualifying children.
The IRS reminds taxpayers seeking a 2021 tax refund that their refunds may be held if they have not filed tax returns for 2022 and 2023. In addition, any refund amount for 2021 will be applied to amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or other past-due federal debts, such as student loans.
The IRS reminds taxpayers that there are ways they can gather the past information they need to file their 2021 tax return. People should, however, start now to make sure they have enough time to file before the April deadline for 2021 refunds. Here are some options:
Create or log in to IRS Individual Online Account: The fastest and easiest way for people to view, download or print tax records and transcripts is to create or log in to their Individual Online Account. There, they can find transcripts of past tax returns, tax account information, wage and income statements and verification of non-filing letters.
Request copies of key documents: Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2021, 2022 or 2023 can request copies from their employer, bank or other payers.
Get transcript by mail: Taxpayers who are unable to get those missing forms from their employer or other payers and cannot access their Individual Online Account can get a tax return or tax account transcript mailed to them by using Get Transcript by Mail on IRS website. Taxpayers can also request a transcript be mailed to them by calling the automated phone transcript service at 800-908-9946.