Taxpayers to forfeit more than $1 billion in refunds – Are you one of them?

Taxpayers to forfeit more than $1 billion in refunds – Are you one of them?

The IRS disclosed there will be more than $1 billion in federal tax refunds forfeited this year if taxpayers don’t claim them by April 18.

The IRS disclosed there will be more than $1 billion in federal tax refunds forfeited this year if taxpayers don’t claim them by April 18.

Refunds have to be claimed within three years or they are forfeited to the government. The unclaimed $1 billion comes from about 1 million taxpayers who still haven’t filed returns for the 2013 tax year. Often the people who leave these refunds behind are young adults, college students, senior citizens and low-income taxpayers.

Why refunds go unclaimed

Forgetting withholdings. Even if you have very little income, your employer may have taken some money from your paycheck for federal tax withholdings. The only way to get it back is to file a tax return.

Not claiming refundable credits. Many tax credits are “refundable credits.” This means you can receive a refund even if you owe no income tax. Common examples available to students and parents are the earned income tax credit and the premium tax credit.

Missing information. Some people don’t file because they’ve lost the information they need. If the reason you can’t file is because you lost your data, you can request an online transcript from the IRS that will give you your wage, income and other tax information. You can also mail the IRS a Form 4506-T to get paper copies mailed to you. However, this will take between five and 10 business days, so don’t delay.

Fear of penalties. Sometimes taxpayers fail to file old returns because they think the IRS may penalize them. There is no penalty for filing a late return if you are owed a refund.

Get your money

The IRS is great at tracking down people who owe them money, but not so great at reaching out to people they owe. This irony should motivate you to get your money back. To be safe, send your 2013 return by certified mail early enough so that the IRS receives it by April 18. Any refunds that aren’t claimed within the three-year due date will be gone forever, swallowed up by the U.S. Treasury Department.

Remember, just because you are not required to file a tax return doesn’t mean you shouldn’t. There are more than a billion dollars in unclaimed refunds – make sure you get yours.

Prepare Now for Future Refund Delays – IRS now required to delay refunds to many taxpayers

Prepare Now for Future Refund Delays – IRS now required to delay refunds to many taxpayers

As part of recent tax legislation, the IRS is now mandated to delay sending out some refunds to taxpayers beginning with 2016 tax returns. If impacted, you will need to plan for this delay.

Topline: If next year’s tax return claims an Earned Income Tax Credit or the Additional Child Tax Credit your refund will be held by the IRS until February 15th.

The delay in sending out tax refunds is mandated by recent tax law legislation because of the proliferation of identity theft and tax fraud. This extra time will be used by the IRS to help prevent revenue loss from early tax return filings claiming invalid tax refunds. Those most impacted by this change are early tax return filers. While the IRS plans future correspondence to alert taxpayers to this change, here are some things to note.

  • Entire refund. If your tax return claims either of these credits, your entire refund will be held until February 15th.
  • Do not delay. If you typically file early, do not delay filing your tax return because of this rule change. Tax returns can still be processed. Only the refund payment is being delayed.
  • The bottleneck. Filing early can help you avoid the bottleneck of tax refund processing. On February 15thyou will want to be at the front of the line to receive your money.
  • Plan accordingly. If you historically plan on receiving and using an early refund, you will now need to plan for this delay.

984,000 Could Lose their Tax Refund

Each year the IRS pulls back money for unclaimed refunds. The amounts are not
trivial, as the unclaimed refunds for 2009 are over $900 million. Here is what
you need to know.

Last week the IRS announced it is holding $917 million in unclaimed refunds for the 2009 tax year. If the claims for these unpaid refunds are not made by April 15th the refunds will no longer be available. Here is what you need to know:

  1. Timely filing. To receive the refund your 2009 tax return must be properly addressed, mailed, and postmarked by April 15th. It is best to send this certified mail in case there is a dispute with the filing of the return. To play it safe, it is also best to plan for the IRS to receive the return prior to April 15th.
  2. Haven’t filed a tax return? There is no penalty for filing a late return that qualifies for a refund.
  3. There may be delays. If you have not filed a 2010 or 2011 tax return, your refund may be granted, but delayed until the other tax returns are filed. In addition, the refund may be used to pay for any unpaid tax obligations.
  4. It will be tough. Remember all of the country is busy preparing 2012 tax returns, so getting help can be a challenge.

If this impacts you, act now. If you fail to file a tax return, the government can collect any taxes owed long after three years. However, if the government owes you money, you only have three years from the original tax filing due date to collect it. There are no exceptions to this time limit.