IRS Alerts Americans to Claim $1B in Unclaimed Tax Refunds by May 17

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In a bid to alert American taxpayers, the Internal Revenue Service (IRS) recently announced that over a billion dollars in unclaimed refunds are potentially up for grabs. The warning comes amidst the realization that nearly 940,000 individuals across the country might be overlooking or unintentionally forgoing their financial dues for the 2020 tax year.

Issued on Monday, this announcement stressed that taxpayers have a deadline closing in fast. The clock is ticking until May 17, the marker set by the IRS for individuals to file their tax returns and claim these unclaimed refunds. With an average median refund estimated at $932 for 2020, this overlooked money stacks up to a figure exceeding a billion dollars.

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Several states have a higher than average ratio of refund-eligible individuals. Texas tops the list with 93,400 potential recipients, closely followed by California with 88,200. Florida and New York are not far behind, housing 53,200 and 51,400 likely candidates respectively.

IRS Commissioner Danny Werfel conveyed the urgency of the situation in a recent statement. He asserted his intent for taxpayers to secure these refunds and emphasized the peril of disregarding or forgetting about them, especially with the approaching May 17 deadline. Urging swift action, Commissioner Werfel implored taxpayers to get a head start to avoid missing out.

For those in need of filing a return, the Commissioner suggested seeking relevant documents such as W-2, 1098, 1099, or 5498 from their respective employer or bank. The IRS also advocates utilizing the “Get Transcript Online” tool on IRS.gov to order a free wage and income transcript, if needed.

The window to claim tax refunds generally lasts three years, post which the funds default to the property of the U.S. Treasury. Usually pegged closely to the April 15 tax deadline, the three-year deadline for claiming unfiled 2020 returns has been extended to May 17 owing to the pandemic. However, the IRS has clarified that if taxpayers haven’t yet filed returns for 2021 and 2022, possible refunds from 2020 will be halted until those due for the subsequent years are conjointly filed.

Voicing concern that some taxpayers may be unfamiliar with this provision, Werfel urged individuals to promptly review their files and start compiling their financial records to avoid jeopardizing eligibility for such refunds. Furthermore, he stressed that the tax season, which officially kicked off on January 29, has seen a hefty number of individual filings already. According to the most recent tax season statistics, over 71.5 million individual tax filings have made their way to the IRS this season.