How to Know If the IRS Owes You Money

A young woman happily looking over her tax refund
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Getting a tax refund could be a nice windfall if you need money for an emergency or want to pay down some of your debt. Surprisingly, tax refunds often go unclaimed by taxpayers for a variety of reasons, which means many Americans could be leaving money on the table. If you think you couldn't possibly be one of them, think again.

How Tax Refunds Go Unclaimed

Every year, millions of American taxpayers their income tax refunds unclaimed, often because they didn't realize they even had one coming. The problem often arises because you're not required to file a return unless you earned over a certain amount. For the 2019 tax season, you must file a return when your filing status is:

  • Single and your income is at least $12,200 or $13,850 if you're 65 or older;
  • Head of household with an income of at least $18,350 or $20,000 if you're 65 or older;
  • Married filing jointly with an income of at least $24,400 and you're both under 65;
  • Married filing jointly with an income of at least $25,700 and one of you is over 65;
  • Married filing jointly with an income of at least $27,000 and you're both over 65;
  • Married filing separate returns with an income of $5 or more;
  • Qualifying widow(er) with an income of at least $24,400 if you're under 65 or at least $25,700 if you're 65 or older.

Note

The IRS encourages you to file a tax return, even if you don't technically to, to assess whether you're eligible to receive a refund.

People often make the mistake of thinking that they don't need to bother because they aren't legally required to file an income tax return. But more often than not, those very same people would receive a refund if they did file, even though they're not required to file. In the meantime, they potentially miss out on big money.

For example, according to the Internal Revenue Service, an estimated $1.4 billion in tax refunds is still waiting to be claimed for the 2015 tax year alone. Those refunds belonged to individuals who have yet to file a return for that tax year. That number doesn't take into account additional money that could be overlooked in state income tax refunds.

Whose Unclaimed Tax Refunds Are These?

There is a wide range of reasons why a tax refund may go unclaimed, but there are some patterns among those people who are owed unclaimed returns. The most common groups who unknowingly leave unclaimed refunds to the Internal Revenue Service (IRS) include:

  • Students
  • Workers who work part-time or for only part of the year but had income taxes withheld
  • Self-employed workers with low earnings who made estimated tax payments but didn't file a return because their earnings were below the threshold
  • Individuals who fail to file a final return on behalf of a deceased family member who is due a refund
  • Individuals who qualified for the earned income credit but didn't file a return because their earnings were below the threshold

What Is the Earned Income Credit?

The last group mentioned above relates to a specific tax credit called the earned income credit (EIC). While deductions are a helpful tool for reducing tax burdens, tax credits are by far the most coveted. A tax credit reduces the taxes an individual or couple owes dollar for dollar, whereas a deduction simply lowers the total amount of taxable income. 

The earned income credit helps qualified low-income individuals and families by paying them back some of the taxes they paid, and in some cases, paying them even though they owed no taxes, to begin. Eligibility for this credit is based on your filing status and household income. A tax credit is only good if used, so if you don't claim it, you could be shortchanging yourself out of a tax refund.

Note

You are not eligible to claim the Earned Income Credit if your tax status is married filing separately.

How to Claim Your Unclaimed Tax Refund

If you think that you may fall into one of the groups above, you might want to see if the IRS owes you money. First, check your records to make sure you've filed a tax return for each of the last three years that you had earnings.

Review your returns for the last three years to make sure they're accurate and to determine if you were eligible for the earned income credit but didn't claim it. While the law allows three years from the filing deadline (typically April 15th) to file your income tax return to claim a refund, if you don't file within the time limit, the money is lost to you forever.

To obtain tax returns for previous years, visit the IRS website at www.irs.gov or call 1-800-TAX FORM (1-800-829-3676). Then claiming your refund could be as easy as filing returns for the last three years if you've overlooked a refund or earned income credit. In fact, it could mean hundreds or thousands of dollars in your pocket.

If you were one of the many who were expecting a refund, but never received it, you might want to check out the "Where's My Refund?" tool on the IRS website. Tax refund checks are mailed to your last known address and can be returned to the IRS if you move and fail to provide your new address to the IRS or the U.S. Postal Service. You can update your address online or by filing Form 8822, which is available online or by calling the 800 number above.

Note

Offsets can reduce or eliminate your tax refund if you owe money to the federal government for unpaid taxes or delinquent federal student loans.

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