For most people, filing taxes falls into the same category as going to the dentist or spending a morning at the DMV: the mundane evils of responsible adulthood. But unlike getting your teeth cleaned or renewing your license, there are legitimate reasons you may have skipped filing a tax return in recent years.
If you're under 65 and make under a certain amount of money — the threshold for single filers in 2020 is $12,400 — you don't have to file. This might have been the case if you were a student in that particular tax year and only earned a little money from a side hustle. Or maybe you experienced unemployment and only worked part of the year. If you're over 65, maybe you were just collecting Social Security benefits, which aren't taxed below a certain income threshold. All valid reasons not to file.
But if one of those descriptions sound like it applies to you, you may want to reconsider your decision, and fast. If you didn't file in 2017, you could be among 1.3 million taxpayers with unclaimed tax refunds from that year worth a collective $1.3 billion. The IRS says the median refund owed to people who didn't file taxes in 2017 is worth $865. But in some states, the typical refund might be in the neighborhood of $1,000.
The IRS says you have until May 17 to file your 2017 taxes and claim that money.
There are 17 states where the IRS estimates that the median refund will be more than $900, meaning half of the missing filers are entitled to receive at least that amount. In Massachusetts, the estimated median refund is $978.
In most states, the number of people who stand to receive refunds from 2017 is in the tens of thousands, but in Texas and California — the most populous states — it's well over 100,000, according to IRS data. In Florida, the number is just shy of 90,000.
If you received a wage and had federal taxes withheld, it's always worth it to file a return, says Lisa Greene-Lewis, a certified public accountant and editor of the TurboTax Blog. "Even if you earned less than the IRS income threshold, you should file," she says. "You could get your withholding back in the form of a refund, and you may also be eligible for some tax credits."
One lucrative credit you may be eligible for: the Earned Income Tax Credit. For 2017, the credit was worth as much as $6,318 and is refundable, meaning that you don't have to owe taxes in order to get it. To qualify for 2017, you must have earned under a threshold that ranges from $15,010 for single filers with no children to $53,930 for jointly filing married couples with three or more children.
And if you were thinking of skipping tax season this year, remember that, in addition to a potential refund or credit, you may also be owed stimulus money. "If you didn't receive your first or second stimulus payments, filing this year allows you to claim the Recovery Rebate Credit," Greene-Lewis points out.
Most online tax software will allow you to file returns dating back three years – commensurate with how long the IRS will accept them. If you earned $72,000 or less in 2020, you may qualify to file your federal return for free through Free File, a partnership between the IRS and the nonprofit Free File Alliance.
If you need help filing, or if you have a complex tax situation, it's worth considering hiring some tax help, says John Wheeler, a CPA and senior financial consultant at Castle Wealth Advisors in Indianapolis, Indiana. "It could be worth it to spend a couple of bucks at a local tax preparer," he says. "Just avoid companies that tell you they'll pay you your refund now and then take a percentage from you off the top."
Video by Stephen Parkhurst
You may also qualify for one of two IRS programs offering free in-person tax assistance: Volunteer Income Tax Assistance (VITA), which is available for individuals making $57,000 or less in 2020, or Tax Counseling for the Elderly (TCE), available to filers 60 years old and up. Be ready to switch gears if you go this route, though, Wheeler says. "It's going to be very difficult to go through the IRS," he says. "There's too many people waiting in line now."
Whether you're filing for 2020 or a previous year, you'll have to have relevant tax documents, such W-2s and 1099s. If you don't have these on hand, you can request a document from the issuing employer or financial institution, which must keep them on record by law. If you're unable to get missing forms, you can order a free wage and income transcript (the government's record of the money you've earned) via the IRS Get Online Transcript tool.
Grow data journalist Gabriel Cortés contributed to this report.
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