Billions of dollars in unclaimed tax refunds from the 2020 tax year are set to expire in just two weeks, according to the IRS. The agency has stated that approximately 940,000 taxpayers across the United States have until May 17th to submit their 2020 returns in order to claim this unclaimed funding. The median refund amount is estimated to be around $932.
Typically, taxpayers have three years to claim past refunds by the April 15th deadline. However, due to the COVID-19 pandemic, the deadline was extended to May 17th this year. After this deadline, any unclaimed funds will become the property of the federal government.
To avoid missing out on these unclaimed refunds, taxpayers are encouraged to act quickly and obtain the necessary documents. It’s important to note that if a taxpayer hasn’t filed their returns for 2021 or 2022, the 2020 refund may be withheld by the IRS. Additionally, if money is owed to the IRS or a state tax agency, the 2020 refund will be applied towards those debts.
IRS Commissioner Danny Werfel emphasizes the importance of taxpayers not missing out on this opportunity. He states, “There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns. Taxpayers should start soon to make sure they don’t miss out.”
In addition to potential refunds, low- and moderate-income workers may also be eligible for the 2020 Earned Income Tax Credit (EITC). This credit can be worth up to $6,660 for taxpayers with qualifying children.
When looking at the state-by-state breakdown, Texas residents are owed the highest amount of total refunds, with over 93,400 residents owed more than $100 million. California comes in second place, with $94 million owed to 88,200 residents. New York state follows closely behind in third place, with $60 million owed to 51,400 individuals. Florida and Pennsylvania also have significant numbers of residents owed unclaimed refunds.
For taxpayers who are unsure if the IRS is still holding their refund money from previous years, filing a tax return for that specific year is the best way to find out. The IRS’s “Where’s My Refund” webpage and tool will provide the refund status to those who have filed their taxes in a given year.
To file a 2020 return, taxpayers will need to gather the necessary documents, such as a Form W-2 from their employer for that year. Other documents that may be required include a Form 1099 for reporting payments from freelance work, contracting, and various income sources. Form 5498s may also be necessary for individuals reporting contributions to a retirement account.
If these documents cannot be obtained from an employer or bank, taxpayers can use the IRS’s “Get Transcript Online” page to order a wage and income transcript. This transcript includes the required documents for filing a tax return. However, it’s important to note that written requests for transcripts can take several weeks, so taxpayers are encouraged to explore other options first.
In conclusion, taxpayers have a limited time to claim unclaimed refunds from the 2020 tax year. Acting quickly and gathering the necessary documents is crucial to avoid missing out on this opportunity. The IRS provides resources such as the “Where’s My Refund” tool and the “Get Transcript Online” page to assist taxpayers in determining their refund status and obtaining necessary documents.
