Almost a billion dollars in unclaimed tax refunds

Refund

Almost one million people have almost $1 billion in unclaimed tax refunds from three years ago. Photo Credit: substack/Flickr.com/CC-BY-SA

Every year, a number of people forget to file their tax returns, even though the IRS can work out the difference between what people pay and what they were paid. As a result, a huge amount of unclaimed tax refunds are just sitting there, waiting to be cashed in – almost $1 billion, in fact.

Yes, there are unclaimed tax refunds

One would think that unclaimed tax refunds couldn’t happen. People love getting refunds, because it’s getting cash back from those Black Hands over at the Internal Revenue Service. One would be wrong.

Mostly, it’s down to unfiled tax returns. People forget and the IRS figures out they owe a refund. Some people might get the idea that if they don’t get a return, they can’t know that.

Wrong.

The IRS, you see, gets statements from employers and it has the same stuff as your W-2, including how much people were paid and withholdings for income and payroll taxes. They do, rest assured, have calculators. Same applies for benefits received.

Currently, according to NBC News, there is $917 million in unclaimed tax refunds, for returns filed in 2010 for the year 2009.

Three years to claim

The law concerning unclaimed tax refunds, according to the IRS, is that a person has three years to claim their refund, after which time it goes straight over to the Treasury, where Timothy Geithner will happily cut a check for Wall Street using those unclaimed funds, or to Justice so they can sell a few more guns.

Some people don’t file because they fall under the minimum income threshold, which according to SmartMoney is $9,750 for single people under 65, $12,500 for single parents, $19,500 for married couples filing jointly. Some people just forget. Other people are dead, but their refunds, if they had one, are dealt with separately.

At present, all claimable unclaimed tax refunds are returns for 2009, which should have been filed by April 15, 2010. There are an estimated 984,000 of them, totaling $917 million. Many are for more than $500 and the Earned Income Tax Credit can still be applied. The deadline, as ever, is April 15.

If you do file

The IRS also posted the number of refunds unclaimed by state. North Dakotans were the most diligent about filing returns, as only an estimated 1,900 people forgot to claim theirs in that state. Californians were the most lazy, as more than 100,000 forgot to do so. Must be why so many celebrities get into tax trouble – they forget about taxes. Either that or they’re stupid.

However, there is a caveat if one has unclaimed tax refunds. If you decide to file a tax return for that year to claim the refund, you have to also file any additional un-filed returns from subsequent years, or you don’t get the money. Late penalties also aren’t applied to returns that garner refunds; if you owe, get out your checkbook.

Any garnishments, such as unpaid student loans, child support or other debts to the government, will be applied to the refund.

Sources

IRS

NBC News

SmartMoney

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