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Usually, taxpayers do everything they can to get their tax refunds as quickly as possible. Surprisingly, though, they’ve left more than $900 million on the table, and the IRS is poised to permanently grab that money next month unless they do something about it.
The IRS reported on Thursday that nearly 1 million taxpayers never filed a 2009 return, leaving a total of $917 million in tax refunds unclaimed.
The amounts involved are fairly large in many cases, with about half of the unclaimed refunds estimated to involve $500 or more. California and Texas had the biggest number of unfiled returns, but people from every state and the District of Columbia are on the list.
With a three-year window to file returns, time is running out. Taxpayers who want to file returns that were originally due on April 15, 2010 have only until this April 15 to do so, or else they’ll no longer be eligible to receive their refunds.
What You Might Have Missed
Part of the problem is that many taxpayers don’t realize that even if they aren’t required to file a return, they still need to do so in order to claim refunds that are owed to them. One of the biggest items people miss out on is the Earned Income Tax Credit, which can provide refunds even if you don’t have any income tax liability.
If you’re concerned that you’ll get in trouble for being so late with your returns, don’t be. As long as you’re actually due a refund, you won’t owe any penalties for filing a late return, as the calculations for determining a tax penalty are based on the tax you owed.
So if you never filed a 2009 tax return, be sure to look into whether you could get a tax refund back if you filed. Otherwise, what should be free money coming back to you will end up going to the federal government instead.
