More than $1 billion in unclaimed refunds from the 2020 tax year are slated to expire in just two weeks from Friday, the Internal Revenue Service (IRS) says.
About 940,000 taxpayers across the United States have until Friday, May 17 to submit their 2020 returns to get the unclaimed funding, the agency has said. The median refund is believed to be around $932.
In a standard year, tax filers have three years to claim past refunds by the April 15 deadline. The IRS has said that the deadline was extended to May 17 due to the COVID-19 pandemic.
After the May 17 deadline, those unclaimed funds will become property of the federal government, according to the IRS. Due to the fast-approaching deadline, taxpayers should act quickly to obtain those documents, the agency recently said.
But the IRS noted in a previous news release that the 2020 refund might be withheld by the tax agency if one hasn’t filed their returns in 2021 or 2022. Also, if money is owed to the IRS or a state tax agency, the 2020 refund will be applied to paying that down or paying other outstanding debts such as child support.
“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” IRS Commissioner Danny Werfel said in a recent statement. “Taxpayers should start soon to make sure they don’t miss out.”
A number low- and moderate-income workers could also be eligible for the 2020 Earned Income Tax Credit, which can be worth as much as $6,660 for taxpayers with qualifying children, the agency says.
On a state-by-state basis, residents of Texas are owed the highest amount of total refunds, with about 93,400 residents owed more than $100 million by the agency. In second place is California, with $94 million owed to 88,200 residents. New York state comes in third place with $60 million owed to 51,400 individuals, the agency says.
The IRS adds that some 53,000 Florida residents are owed about $58 million, and 38,600 residents of Pennsylvania are owed $43 million in unclaimed refunds.
What Can Be Done
Taxpayers can learn if the IRS is still holding onto years-old refund money by filing a tax return for that year, according to the agency. The IRS “Where’s My Refund” webpage and tool only reports the refund status to people who have filed their taxes in a given year.“Another option is for people to file Form 4506-T with the IRS to request a ‘wage and income transcript,’” the IRS says. “A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498, and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return.”
But the IRS cautioned that “these written requests can take several weeks,” meaning that it may be already too late for some. “People are strongly urged to try the other options first,” it says.
