The IRS is alerting taxpayers to a potential windfall they might be overlooking, with more than $1 billion in unclaimed refunds up for grabs.
According to the federal tax authority, approximately 940,000 individuals across the United States have until May 17 to file tax returns for the 2020 tax year and claim these unclaimed refunds. IRS Commissioner Danny Werfel emphasized the urgency, stating, “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds.”
The unclaimed refunds for the 2020 tax year average a median amount of $932. Notably, states such as Texas, California, Florida, and New York boast the highest number of individuals potentially eligible for these refunds. Below is a breakdown of the estimated number of people in each state who may still be entitled to a 2020 tax refund, as per IRS estimates:
How to claim your refund
For individuals who find themselves needing to file a return, the Internal Revenue Service (IRS) provides guidance on gathering necessary documentation, such as W-2 forms from employers or various 1098, 1099, or 5498 forms from banks and financial institutions. These forms detail income, interest earned, and other financial transactions relevant to tax reporting. Alternatively, individuals can access their wage and income transcripts for free through the “Get Transcript Online” tool on the official IRS website, IRS.gov.
It’s important to note that taxpayers typically have a window of three years to file their returns and claim any tax refunds owed to them. Failure to file within this timeframe may result in the unclaimed refunds reverting to the ownership of the U.S. Treasury.
While the usual deadline for claiming old refunds typically coincides with the April 15 tax deadline, the IRS extended the deadline for unfiled 2020 returns to May 17 in response to the COVID-19 pandemic. However, it’s essential to understand that if taxpayers have outstanding returns for tax years 2021 and 2022, any potential refunds for 2020 will be withheld until these subsequent returns are filed to ensure there are no outstanding tax obligations.
IRS Commissioner Danny Werfel emphasized the unique circumstances many individuals faced during the pandemic, which may have caused them to overlook potential refunds for the 2020 tax year. He encouraged taxpayers to proactively review their records and gather the necessary documentation to meet the upcoming May deadline, thereby avoiding the risk of missing out on potential refunds.
The commencement of tax season on January 29 marked the official start of the annual filing period. As of the latest statistics, more than 71.5 million individual tax filings have been submitted to the IRS this season, reflecting the ongoing engagement of taxpayers with their filing obligations.