Taxpayers are at risk of forfeiting over $1 billion in unclaimed tax refunds for the 2020 tax year, as cautioned by the IRS.
IRS Commissioner Danny Werfel emphasizes the urgency for around 940,000 Americans to file their tax returns by May 17 to claim their refunds, which have an average median value of $932.
Taxpayers are reminded of the three-year deadline to claim refunds, with this year's deadline extended to May 17 due to COVID-19. Failure to claim refunds results in funds reverting to the U.S. Treasury.
Taxpayers may be leaving more than $1 billion on the table, the IRS is cautioning them.
Taxpayers may be leaving more than $1 billion on the table, the IRS is cautioning them. (Photo : by Zach Gibson/Getty Images)
Opportunity for Unclaimed Tax Refunds
On Monday, the federal tax collector said that around 940,000 Americans had until May 17 to file tax returns for unclaimed refunds for the 2020 tax year, which amount to over $1 billion in total across the country.
For 2020, the average median refund is $932. New York (51,400), Florida (53,200), Texas (93,400), and California (88,200) have the highest number of individuals who may be eligible for these refunds.
"We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds," IRS Commissioner Danny Werfel stated in a statement. To ensure they don't lose out, taxpayers should begin as soon as possible because the deadline for filing their reports is May 17.
The IRS recommends taxpayers who need to submit a return to get their W-2, 1098, 1099, or 5498 from their bank or employer. They can also use IRS.gov's "Get Transcript Online" option to get a free wage and income transcript.
Understanding Refund Deadlines and Tax Obligations
Generally, taxpayers have three years to submit and obtain a refund of taxes; if they don't, the monies will revert to the United States Treasury.
The deadline for claiming previous refunds usually coincides with the April 15 tax deadline; however, due to the COVID-19 epidemic, this year's three-year timeframe for 2020 unfiled taxes was moved to May 17. However, in order to ensure that they don't owe, any 2020 refunds would be delayed until the taxpayers submitted returns for tax years 2021 and 2022.
"Some people might not realize they could be owed a refund," Werfel stated. We advise individuals to check their files and begin compiling documentation as soon as possible to avoid missing the May deadline.
The formal start of tax season was January 29. The IRS has received almost 71.5 million individual tax files this tax season, according to the most recent numbers.
Understanding the refund deadlines and tax obligations further reinforces the need for timely action, especially in light of the extended deadline due to the COVID-19 pandemic. As tax season progresses, it's crucial for taxpayers to stay informed and proactive to avoid missing out on valuable refunds.
