IRS Says There Are Unclaimed Tax Refunds Totaling $1 Billion — Are You Owed Money?
If you never filed a 2020 tax return because of the COVID-19 pandemic, you might be owed a refund by the IRS. To claim it, you’ll need to file a return — and the clock is ticking.
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In an announcement on March 25, 2024, the IRS said that more than $1 billion in refunds for tax year 2020 are still unclaimed, involving 940,000 taxpayers. The average median refund is $932 for 2020. The IRS has done a special state-by-state calculation to show how many people are potentially eligible for the refunds.
Taxpayers have until May 17, 2024, to submit their 2020 tax returns and claim the money.
“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 statement. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds. There’s a May 17 deadline to file these returns so taxpayers should start soon to make sure they don’t miss out.”
Why Is There a Deadline?
Taxpayers typically have three years to file and claim their tax refunds. If they don’t file within three years, the money becomes the property of the U.S. Treasury. Under normal circumstances, that three-year window would have closed on April 15, 2024, which is this year’s tax deadline.
But for 2020 tax returns, taxpayers were allowed more time than usual to file to claim their refunds because of the pandemic. That’s why the three-year window was extended to May 17. The IRS issued Notice 2023-21 on Feb. 27, 2023, which provided legal guidance on claims made by the postponed deadline.
Now, the agency wants to get the word out to taxpayers who usually miss out on refunds.
“People faced extremely unusual situations during the pandemic, which may have led some people to forget about a potential refund on their 2020 tax returns,” Werfel said. “People may have just overlooked these, including students, part-time workers and others. Some people may not realize they may be owed a refund. We encourage people to review their files and start gathering records now, so they don’t run the risk of missing the May deadline.”
How Much Is at Stake?
If you have still not claimed your 2020 refund, you might be missing out on more than just the refund itself. As the IRS noted, many low- and moderate-income workers might be eligible for the earned income tax credit (EITC). For tax year 2020, the credit was worth as much as $6,660.
“People get scared and think it’s going to be harder than it really is [and] they don’t realize that they’re leaving money on the table,” said certified financial planner John Chichester Jr., founder and CEO of Chichester Financial Group in Phoenix.
Those who are potentially eligible for the EITC in 2020 had incomes below the following thresholds:
$50,594 ($56,844 if married filing jointly) for those with three or more qualifying children.
$47,440 ($53,330 if married filing jointly) for people with two qualifying children.
$41,756 ($47,646 if married filing jointly) for those with one qualifying child.
$15,820 ($21,710 if married filing jointly) for people without qualifying children.
The IRS also reminded taxpayers seeking a 2020 tax refund that their payments might be held if they have not yet filed tax returns for 2021 and 2022. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and might also be used to offset unpaid child support or past due federal debts, such as student loans.
Current and prior year tax forms (such as the tax year 2020 Forms 1040 and 1040-SR) and instructions are available on the Forms, Instructions & Publications page or by calling toll-free 1-800-TAX-FORM (1-800-829-3676).
Vance Cariaga contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: IRS Says There Are Unclaimed Tax Refunds Totaling $1 Billion — Are You Owed Money?
