Unclaimed tax refunds nearing $1 billion

"Tax Refunds"

The Internal Revenue Service (IRS) has revealed hundreds of thousands of taxpayers have yet to claim their 2020 tax refunds. Totalling almost $1 billion, the average claim per person sits at around $932. The catch? These refunds must be claimed by May 17, 2021.

As IRS Commissioner Danny Werfel asserts, “time is running out”. Completing paperwork on time is crucial to receive entitled refunds. Any delay might result in forfeiting these refunds, which gives good reason to tackle those tax forms sooner rather than later.

Pretty shocking is that nearly one million taxpayers have not filed their 2020 returns. Even more shocking …

Urgency in claiming 2020 tax refunds

over 88,000 of these people are from California where the average expected refund is around $835. Not filing returns could result in substantial unclaimed money and this substantial figure highlights the need for taxpayers to better understand the tax filing process.

Usually, the federal tax law provides a three-year window for claiming refunds. However, considering the impact of the COVID-19 pandemic, this deadline has been extended by a year for the 2020 tax returns. Still, you need to file within this extended period to claim any potential refund. Despite the deadline extension, processing refunds takes time, so getting your taxes done early is highly recommended.

The IRS is also raising concern over workers with low to moderate incomes who haven’t filed their 2020 returns. They stand the risk of missing out on the Earned Income Tax Credit offering $6,600 to qualifying taxpayers with children. It’s a substantial potential loss for individuals already struggling, so filing your return as soon as possible is critical.

Finally, it’s vital to keep in mind that if you’re seeking to claim your 2020 refund, but haven’t filed returns for 2021 or 2022, the IRS or state tax agencies will use your 2020 refund against any outstanding money owed by you. This procedure ensures that taxes for subsequent years are settled proportionately, without you incurring additional penalties or interest on unpaid balances.