How to Know if the IRS Owes You Money

A young woman happily looking over her tax refund at her home desk
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Getting a tax refund can be a nice windfall if you need the money for an emergency, want to pay down some of your debt or save, or maybe just want to buy yourself something you couldn't otherwise afford. Surprisingly, tax refunds often go unclaimed by taxpayers for a variety of reasons. Many Americans leave money on the table each year, often because they're due a refund, but they didn't file a return to claim it.

How Tax Refunds Go Unclaimed

Millions of income tax refunds go unclaimed because the individuals don't realize they even have one coming, so they don't file a tax return. This problem often arises because you're not required to file a return unless you earn over a certain amount during the course of the tax year in question.

You must file a 2020 tax return in 2021 if your 2020 income was greater than the amount of the standard deduction you're entitled to claim. The standard deductions break down like this:

  • Single: $12,400
  • Single and age 65 or older or blind: $14,050
  • Married filing separately: $12,400
  • Head of household: $18,650
  • Head of household and age 65 or older or blind: $20,300
  • Married filing jointly: $24,800
  • Married filing jointly, and one spouse is age 65 or older or blind: $26,100
  • Married filing jointly, and both spouses are either age 65 or older or blind: $27,400
  • Qualifying widow(er): $24,800
  • Qualifying widow(er) and age 65 or older or blind: $26,100

Note

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

People often make the mistake of thinking that they don't have to bother with filing an income tax return when they aren't legally required to do so, but more often than not, they would receive a refund if they were to file. The IRS indicated in 2019 that an estimated $1.4 billion in tax refunds was still waiting to be claimed for the 2015 tax year alone. Those refunds belonged to individuals who had yet to file returns for that tax year.

Whose Unclaimed Tax Refunds Are These?

There's a wide range of reasons why a tax refund might go unclaimed, but there are some patterns among those people who are owed unclaimed returns. The most common individuals who unknowingly leave unclaimed refunds to the IRS include:

  • Students
  • Workers who work part-time or for only part of the year but have income taxes withheld
  • Self-employed workers with low earnings who make estimated tax payments but don't file a return because their earnings are 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 qualify for the earned income credit but don't file a return because their earnings are below the threshold

What Is the Earned Income Credit?

A deduction is a helpful tool for reducing taxes owed, but a tax credits is even better. A tax credit subtracts directly from the tax balance an individual or couple owes. It does so dollar for dollar, whereas a deduction simply reduces the total amount of income that's subject to tax. 

The Earned Income Credit helps qualified low-income individuals and families by paying back some of the taxes they paid, or paying them even though they owed no taxes. Eligibility for this credit is based on your filing status, household income, and number of child dependents. The maximum credit as of tax year 2020 is $6,660, and it's refundable—the IRS will send you the money if you don't owe taxes or if you owe less than this threshold.

You could be shortchanging yourself out of a sizeable tax refund if you're eligible and don't file a return to claim it.

Note

You aren't eligible to claim the Earned Income Credit if your tax status is married filing separately.

How to Claim Your Unclaimed Tax Refund

You might want to find out whether the IRS owes you money if you fall into any of the above groups of taxpayers. First, check your records to make sure that 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 whether you were eligible for the Earned Income Credit but didn't claim it. The law allows three years from the filing deadline (typically April 15) to file your income tax return and claim a refund. The money is lost to you forever if you don't file within that time limit.

This April 15 deadline has been extended to June 15 in 2021 for residents of Oklahoma, Louisiana, and Texas in response to the 2021 severe winter storms. The deadline for all other individual filers has been extended to May 17 in 2021 in response to the ongoing coronavirus pandemic. Taxpayers will have three years from these dates to file a return to claim a refund if they fail to file one this year.

You can visit the IRS website or call 1-800-TAX FORM (800-829-3676) to obtain tax returns for previous years. Claiming your refund could be as easy as filing returns for the last three years if you've overlooked a refund or qualified for the earned income credit and not claimed it.

You might want to check out the Where's My Refund? tool on the IRS website if you were expecting a refund but never received it. Tax refund checks are mailed to your last known address if you don't request direct deposit into your bank account. They can be returned to the IRS if you move and fail to provide your new address to the IRS or to the U.S. Postal Service.

You can update your address online or by filing Form 8822, which is available online.