For many people, January 31 is a time of anticipation. It’s the time when the W2s arrive and millions of Americans can start filing their income taxes. Many will receive a refund from the government that Uncle Sam has been deducted all year from their paychecks. In my time as a tax lawyer in San Jose, I’ve learned that some Americans do not always claim these funds! The IRS has reported that it is holding on to more than $1 billion in unclaimed tax refunds.
In 2013, more than one million taxpayers failed to file taxes and claim their rightful tax refund. Taxpayers have a three year window of time in which they can claim their refunds from previous years. Many are unaware that they are owed refunds, and some fail to file taxes because they are afraid of the legal ramifications—they may have outstanding warrants or old debts.
If the taxpayer does not claim the funds in time, the money reverts back to the U.S. Treasury. Each year, money sits in the Treasury, waiting for the right taxpayer to lay claim to it. Although the IRS makes every effort possible to locate the owners of the funds, it is often the case that most of it is simply unclaimed.
Why Don’t People Claim Their Refunds?
There are many reasons that people do not claim their refunds from the IRS. Some taxpayers are college students who don’t believe they are due a refund. Others believe that missing the April 15 deadline for filing means that they are no longer entitled to a refund. Still others are incapacitated, housed in hospitals or other institutions. Some people do not know that they have up to three years to claim back refunds, and simply believe that they are no longer eligible.
There are some taxpayers who don’t file tax returns because they are afraid that they will get in trouble with the law. The IRS requires that everyone who earns more than a certain amount of income each year file a return. Even taxpayers who are engaging in illegal activities are required to file a return. These taxpayers may fail to file out of fear of getting in trouble with the law.
The majority of taxpayers who are owed a refund live in Texas, California and Florida. The average amount of unclaimed money owed is $763, with taxpayers in Alaska and Wyoming losing out on the biggest refunds of more than $900, on average.
The Reasons for Refunds
You might be owed a refund if you overpaid your taxes throughout the year or if you failed to claim certain credits like the Earned Income Tax Credit, child tax credit or student education credit. You may also be owed a refund if you failed to file because you thought your income was too low to get money back from the IRS.
Other people are owed refunds because they have dependents that they failed to claim.
The IRS is holding on to the money of millions of American taxpayers. With more than $1 billion waiting to be claimed, Uncle Sam wants you to get what’s owed to you. Click here to see if the IRS has money waiting for you.
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