Americans are running out of time to claim $1 billion in unpaid tax refunds from the IRS this year.
The IRS hangs on to unpaid tax refunds for several years after the applicable tax year, but Americans have only until May to obtain payments from 2020. The federal government owes nearly a million Americans money from their 2020 tax returns, plus the 2020 Recovery Rebate Credit.
"If you didn't file a 2020 tax return in 2021, you could be leaving money on the table," finance expert Michael Ryan, the founder of MichaelRyanMoney.com, told Newsweek. "The IRS is currently holding over $1 billion in unclaimed refunds for nearly 1 million taxpayers who failed to file a 2020 return."
Many Americans choose not to file taxes because they don't think they qualify, or they forget to fill out the proper forms. After three years, though, the IRS will stop reserving the 2020 funds for later filers and will hand them over to the U.S. Treasury soon.
That means more than $1 billion could go unclaimed for nearly 940,000 taxpayers. The IRS said the average refund amount is $932. That could be a significant amount of money for American families still dealing with inflationary prices across all sectors.
Those who haven't filed yet must submit their taxes, with paper forms mailed to your regional IRS office. This is because the IRS does not accept online tax returns for prior years, an additional layer of complexity for most taxpayers.
Read more: When Are Taxes Due? Tax Deadlines and Dates for 2024
Americans might want to know whether they're owed a tax refund or stimulus payment from 2020, but there's no way to check without filing the return itself.
Many who didn't make any income in 2020 chose not to file, but that means they likely missed out on credits like the Earned Income Tax Credit or Child Tax Credit they're still eligible for.
Read more: The Child Tax Credit: Who Qualifies and How to Claim It
In 2021, taxpayers had until May 17 to file their 2020 tax returns, so the three-year deadline to claim your refund is May 17, 2024.
As long as you get your 2020 taxes in before this date, you can expect any eligible refund will come your way, but don't expect a speedy deposit, said Kevin Thompson, a financial expert and founder of 9i Capital Group.
"When you file your return, it is important that you keep a receipt of the date you sent the tax return in via mail because it can easily take quite a long time to have this rectified," he told Newsweek. "The IRS is severely understaffed and using antiquated technology, so do not expect a quick turnaround."
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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