Taxpayers Could End Up Leaving $1.3 Billion on the Table. Here’s Why
Most people who file a tax return wind up with a refund. But if you’re due a refund and don’t file a tax return, you’ll forgo that money.
This may be the case for an estimated 1.3 million Americans who are owed a refund for the 2017 tax year. The IRS recently announced that it’s hanging onto over $1.3 billion in unclaimed money, and those who are eligible to split that pot only have a limited window of time to go after their cash.
Why you may be due a refund
Some low-income workers don’t have to file a tax return. But if you don’t, you could end up missing out on important tax credits that put more money back in your pocket.
One such credit is the Earned Income Tax Credit, or EITC, which, for the 2017 tax year, is worth up to $6,318. What makes the EITC unique is that it’s fully refundable, so if you owe the IRS no money and qualify for the credit, the IRS will pay you the entire difference.
Let’s get back to those 2017 tax returns. Even if you didn’t have to file one, you may want to so you can claim the EITC or another credit you may have been entitled to. But if you’re going to do so, get moving. You only get three years from a tax return’s due date to submit it after the fact. 2017 tax returns were due in April of 2018, and you get three years to submit yours for a refund. That means this spring is when that window runs out.
The tax-filing deadline has been extended this year to May 17, so you technically have until then to submit a return for 2017. But the sooner you file that return, the sooner you’ll get your refund. And if your finances have taken a hit at all during the pandemic, a nice check from the IRS could come in very handy.
The IRS estimates that half of the tax refunds it’s yet to distribute for the 2017 tax year are worth more than $865. But yours may be a lot higher. And that’s money you shouldn’t hesitate to go after — even if it’s several years late.
Consider filing other returns, too
If you haven’t filed a tax return in years, you may also want to look at submitting one for 2018 and 2019. If you’re due a refund from 2017 and your financial situation has been similar over the past three years, then chances are you’ll be in line for a refund for those other two tax years, as well.
Along these lines, it pays to file a 2020 tax return, especially if you were expecting a stimulus check last year but never got one. At this point, if you’re missing that cash, your only remedy is to claim the Recovery Rebate Credit on your 2020 taxes. Doing so could put up to $1,800 in your pocket, as that’s the sum of the two stimulus rounds that went out last year.
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