Could the federal government be holding your hard-earned money? The IRS revealed that over $1 billion in unclaimed tax refunds from 2021 is about to be forfeited to the government unless taxpayers act quickly. Here’s what you need to know!
At a glance:
- IRS announced over 1.1 million taxpayers have unclaimed tax refunds from 2021 totaling more than $1 billion
- Taxpayers have until April 15, 2024 to file their 2021 tax returns and claim these refunds
- The median refund is estimated at $781, with some states having median refunds over $900
- After the three-year window closes, unclaimed refunds become property of the U.S. Treasury
- Taxpayers may also miss out on valuable credits like the Earned Income Tax Credit worth up to $6,728 for 2021
Billions at Risk of Government Seizure
The IRS has issued an urgent warning to more than 1.1 million Americans who haven’t filed their 2021 tax returns. These taxpayers are collectively owed over $1 billion in refunds that will permanently become government property if not claimed by the approaching deadline.
Hardworking Americans have until April 15, 2024, to submit their 2021 tax returns and claim what rightfully belongs to them. The median refund amount waiting to be claimed is $781, though some states like Pennsylvania, Massachusetts, and Rhode Island have median refunds exceeding $900.
Use It or Lose It: The Three-Year Rule
Federal law provides taxpayers with a three-year window to file returns and claim refunds before the money permanently transfers to the U.S. Treasury. This strict deadline means taxpayers who don’t act now will forever lose access to money that was withheld from their paychecks.
“By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2021,” the IRS warned in its announcement.
The situation is particularly concerning for low and moderate-income workers who may be eligible for significant tax credits.
“Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2021, the EITC was worth as much as $6,728 for taxpayers with qualifying children,” the IRS noted.
Taxpayers seeking to claim their 2021 refunds should be aware that there could be additional complications. The IRS may hold 2021 refunds if taxpayers haven’t filed returns for 2022 and 2023, creating a potential cascade of paperwork for those who’ve fallen behind.
The government has made resources available for those missing necessary tax documents from 2021. Taxpayers can request missing W-2s, 1098s, 1099s, or other forms from employers and financial institutions, or use the IRS “Get Transcript” service to obtain records of previous tax information.