Did you know that the IRS reports over 1 billion dollars in unclaimed tax refunds every year? That’s right, more than a billion dollars of money that is owed to taxpayers across the country is reported by the IRS every year and tax filers who didn’t file their 2020 tax returns yet have until May 17, 2024 to file their 2020 tax returns. How did this happen?
In most cases, refunds go unclaimed because taxpayers who don’t meet the IRS income threshold requirement to file a tax return are actually entitled to a tax refund, but since they never file a return, they can’t claim that money.
Another portion of unclaimed tax refunds that the IRS may be holding onto may include the Earned Income Tax Credit, or EITC. This is a tax credit, nota deduction, that’s available to many lower to moderate income workers, and this credit often goes unclaimed. The maximum credit for EITC for 2020 was worth as much as $6,660.
If this sounds like you, it’s time to get to work so can you claim what’s rightfully yours. One thing to keep in mind is the IRS places just a three year window on claiming these past refunds. Usually, tax filers have three years from the original tax deadline to file and claim a tax refund. The deadline is also usually the April tax deadline. But for 2020 tax returns, the date was postponed to May 17, 2024, since the deadline for tax year 2020 was extended to May 17 under COVID relief. After that time lapses, the money goes to the Treasury.
The deadline to claim tax year 2020 refunds (the tax return you typically would have filed in 2021) is May 17, 2024. You’ll also want to note that if you want to claim a refund from two or three years ago, you’ll likely need to make sure all subsequent year tax returns have been filed in order for the funds to be released. If you haven’t filed a 2020 tax return, you should quickly file to potentially get this refund.
If you’re thinking about claiming a potential refund that may be a few years old, you will have to pull together some documentation that records your income and taxes paid throughout the year as well as deductible expenses. Coming up with W-2 and 1099 forms a few years ago may take some time. This is why it’s important to keep all tax-related documents in a safe place for at least 3-7 years.
If you can’t locate your documents needed to file your 2020 taxes, the next step would be to contact your employer or payer at the time in question and request copies of the forms. If these efforts are unsuccessful, you can get a free transcript from the IRS showing information from these year-end documents by ordering a free wage and income transcript at IRS.gov using the Get Transcript Online tool or by filing Form 4506-T to request a wage or income statement.
Keep in mind, according to IRS tax filing statistics, the average refund for 2020 was over $2,600 and the IRS estimates that half of the unclaimed refunds for 2020 are more than $932.
So, think about your situation and decide if doing a little legwork to track down documentation and filing old tax returns is worth it. You may have a refund for previous years coming your way.
If you have not filed your 2023 taxes yet and made less than the IRS income filing requirement($13,850 single, $27,700 married filing jointly, and $20,800 head of household), don’t delay filing your 2023 taxes. You may be leaving money on the table by not filing. Especially if you had federal taxes withheld from your paychecks or you are eligible for a tax credit like the Earned Income Tax Credit or education credits for students.
Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
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