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hand full of cashEach year, a percentage of taxpayers do not file a tax return. Some choose not to file because they owe money; however, a surprising number of people are due to receive a refund and do not file. Billions of dollars worth of unclaimed tax refunds are amassed every year. It is extremely easy to claim a refund from a prior tax year; however, this must be done within three years of the due date.

Who is Due a Refund

Taxpayers who overpaid estimated tax or those who had more tax withheld than required could be due a refund. Lower-income taxpayers may also be eligible for the Earned Income Tax Credit, which can result in a refund regardless of whether or not taxes were overpaid. Conversely, taxpayers who are behind on child support payments, or have student loans in default may find that their return has been seized by the IRS. However, it is still important to file to avoid breaking any laws and to reduce debt obligations.

Filing a Prior Year’s Return

In order to claim a refund for a prior tax year, a return must be filed. There are a couple of different ways to accomplish this task. The Internal Revenue Service (IRS) has downloadable tax forms for prior years on their website. These can be completed and filed by mail. A tax preparation service can also assist with filing previous year’s returns, for a fee.

Filing Needs

Filing a prior year’s return requires some attention to detail since tax laws and requirements are always changing. Be sure to gather all W-2’s or 1099 forms and other tax documents before starting to prepare the return. For taxpayers who itemize deductions, receipts or other proof of expenses must be gathered and organized. It can be a challenge to locate all documents from a prior year, but with a bit of effort, this can be easily accomplished. Since employers file all W-2’s and 1099 forms with the IRS, this information can be obtained by request.

Taxpayers must file a return on the form from the year they are filing for, for example, if filing a tax return for the tax year 2016, the 2016 forms should be used. Also, the instructions for that year must be followed. If the form is correct, but the instructions are not, the return may have to be filed again. It is vital to file returns for all missing years and to file soon, returns not claimed within the three-year deadline become the property of the IRS.

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