Found money alert: There could be an extra tax refund out there with your name on it.
The IRS has a whopping $1.4 billion up for grabs in unclaimed refunds, it announced Wednesday. The catch? It’s meant for the nearly 1.2 million taxpayers who have yet to file their 2015 tax returns.
The median potential refund comes in at $879 nationwide. Low- to moderate-income taxpayers may be owed even more if they’re eligible to claim the Earned Income Tax Credit, a tax break that was worth up to $6,242 in 2015.
But the clock is ticking to claim what's yours. You only get a three-year window from initial tax deadline to recover an old refund before the U.S. Treasury absorbs it. (Most taxpayers have until April 15 of this year to claim their 2015 refunds, except for those in Maine and Massachusetts, who have until April 17, according to the IRS.)
Securing your share comes down to two steps.
Experts say there are plenty of reasons why you could have unclaimed refund money in the pot.
The simplest is a clerical error, such as accidentally putting the wrong address, bank account, or contact information on your tax return, caused your refund to bounce back to the IRS.
More commonly, however, these unclaimed refunds can be traced back to folks who simply never filed a tax return. “Students, part-time workers, and many others may have overlooked filing for 2015,” IRS commissioner Charles Rettig said in the announcement.
If your earnings fall under certain income thresholds, you actually aren't legally obligated to file a tax return. (Click here to see if you’re in that camp.) Just know that skipping out could mean you’re leaving money on the table.
"If it turns out the amount of taxes that were withheld [from your paychecks] were more than the amount that you owed, if you filed, you would actually be due a refund," says George K. Yin, a law and taxation professor at the University of Virginia School of Law.
The IRS is essentially sitting on a pile of money—and they don't know who it belongs to. If you know you've failed to file a return in the past, your best bet is to get yourself squared with the IRS as soon as possible before that April deadline.
There’s no penalty for filing a late return if you’re due a refund. But if you happen to have a state or federal tax liability or past-due child support or federal debt, that could claim some or all of your refund.
If you've filed past returns and never received an expected refund, you can check your IRS refund status here.
Even if you’ve been diligently filing on time, it could also be worth reviewing those recent returns for missed opportunities. (An estimated 1 in 5 eligible taxpayers fail to claim the EITC, for example.)
Cari Weston, director of tax practice and ethics at the American Institute of CPAs, suggests going over the biggest life changes you've experienced, like getting married, having a child, going back to school, starting a business, and so on. It's possible those life changes entitled you to tax benefits you never claimed. Connect with a CPA or qualified tax preparer to set the record straight.
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