Unclaimed money this, unclaimed money that, it may feel like you have been seeing more news about unclaimed money lately. That’s not a coincidence! Recently, the Internal Revenue Service (IRS) said that there are tax refunds that are due to individuals that totals nearly $1.5 billion. However, these funds aren’t going to be available for people to claim forever. Instead, people needed to claim these funds before April 18th. Sadly this date has passed. However, individuals that received an extension on their 2018 return have until October 17th. Many people don’t know where these funds come from, or even how to claim what they are due! That is why we will talk about it more in-depth so you can get a better understanding of these unclaimed funds that you may be able to get.
Where Did This $1.5 Billion Come From?
So we are talking about over one billion dollars of unclaimed money. However, where do these funds come from? Well this money is the result of 1.5 million taxpayers who did not file a tax return in 2018 (according to the IRS). But why did most people need to claim these funds by April 18th? Well the three year period to claim the funds came to an end. This window is the timeframe where people can claim the money from this tax return but once it closes then it is done for most taxpayers!
It’s also important to keep in mind that not all taxpayers have this deadline. Instead, people that live in Massachusetts or Maine had until April 19th to claim the funds because these states celebrate Patriots’ Day. Patriots’ Day is a yearly event that celebrates the battles of Concord and Lexington. These battles were some of the first ones to happen during the American Revolutionary War. Other taxpayers may have the deadline of October 17th if they received an extension.
When people think of unfiled taxes, they may think of criminal penalties. However, even though a majority of Americans need to file yearly tax returns, not everyone has that requirement. Instead, typically qualifying households like those that are low-income do not need to file a return if they earn less than the standard deduction. For example, in the 2018 tax year, the standard deduction was:
- $12,000 for Single Filers
- $18,000 for Heads of Household
- $24,000 for Married, Joint Filers
It is important to note that the Center on Budget and Policy Priorities (CBPP) estimates that 12 million Americans don’t file a yearly tax return. It’s also important to keep in mind that this deadline isn’t coming out of nowhere for those that have unclaimed funds. The IRS actually has actively tried to reach out to people who didn’t file over the past two years. That’s because a lot of the recent stimulus support depends on the taxpayer’s annual return!
How Much Can You Get?
The amount you will get will vary depending on what you are due. However, you can look at the median value for reference. According to the IRS, the median value of these unclaimed tax refunds is $813! That means a person can expect half of the unclaimed refunds to be less than $813 and half will be over $813. This gives you a 50/50 chance of getting a refund that’s worth over $813!
Who Can Get a Bigger Refund?
Low income families and moderate income families may be in for a nice surprise when it comes to their refund checks. That’s because they may qualify for bigger refunds if they file and are eligible for the Earned Income Tax Credit (EITC). The EITC credit, which can vary depending on the number of children you have, in 2018 was worth $6,431 at most.
How to Claim a Refund?
If you want to claim money that rightfully belongs to you then you will want to claim your refund. Keep in mind that these funds are only available to people that did not file their 2018 taxes. That means that if you are someone that filed their 2018 taxes then you will not qualify to receive this money! The first step to claim a refund is to have filed your 2018 taxes before the April 18th (or April 19th or October 17th) deadline. If you need help filing your taxes then there are assistance resources available to consider! The IRS offers support like free tax return preparation for eligible taxpayers. They offer the Volunteer Income Tax Assistance (VITA) program and Tax Counseling for the Elderly (TCE) program. These programs can provide basic tax return preparation services for free to those that qualify.
When filing your return, you will have to file a paper return with the IRS center that you can find listed on the last page of the current 1040 Form. It’s important to note that this varies by state. For example, individuals that live in southern states will have to send their returns to a different IRS office than states in the north. 2018 taxes must be filed with a paper return but tax forms for 2019, 2020, 2021, and on can be filed electronically.
One of the downsides with a paper filing is the fact that it can lead to longer processing times. Filing a paper return means that someone has to open it by hand and it can be more time consuming for the agency to dispatch these types of returns. Once you file, then you will wait to see what return you are due. If an individual doesn’t file their return by April 18th (or April 19th/October 17th for those that qualify) then the refunds will become property of the United States Treasury Department.
Your Refund May be Put on Hold
Even if you file your 2018 taxes by the deadline, it may not be smooth sailing yet. You may not be able to get a refund check right away. That’s because the IRS has warned that if a person still hasn’t filed their 2019 or 2020 taxes then they may not be able to receive their refund. Besides the fact that your refund check may be held, you need to keep in mind that the funds from your refund may be applied to any tax debt that you owe. It can also be applied to other obligations like overdue child support, past due federal debts, etc.
You should be hearing sirens in your head if you haven’t filed your 2018 taxes. That’s because the deadline is coming in hot for you to claim money that rightfully belongs to you. The IRS stated that the median value for these refunds is $813. This means that a person can expect to have a 50/50 chance of getting more or less than that amount. If you want to claim the funds that rightfully belong to you, you still have a chance. You will need to file your 2018 taxes. If you need help filing a return, there’s support available. You may be able to get support through free IRS programs like VITA or TCE.