IRS Is Holding Billions in Unclaimed 2015 Refunds … for Now
Incredibly, the IRS says it is holding as much as $14 billion in unclaimed tax refunds owed to an estimated 1.2 million taxpayers who did not file 2015 federal income tax returns (IR-2019-38, 3/13/219).
Mar. 20, 2019
Incredibly, the IRS says it is holding as much as $14 billion in unclaimed tax refunds owed to an estimated 1.2 million taxpayers who did not file 2015 federal income tax returns (IR-2019-38, 3/13/219). These taxpayers must file their 2015 returns by the April 15th due date for filing 2018 returns—April 17th for residents of Maine and Massachusetts—to claim their refunds.
If the taxpayers don’t act by the deadline, the tax money will remain in Uncle Sam’s coffers.
The irony isn’t lost on the IRS. Each year, it posts a reminder about unclaimed refunds from prior years during the ongoing tax filing season.
“We’re trying to connect over a million people with their share of $1.4 billion in potentially unclaimed refunds for 2015,” said IRS Commissioner Charles Rettig in the latest news release. “Students, part-time workers and many others may have overlooked filing for 2015. And there’s no penalty for filing a late return if you’re due a refund.”
The IRS estimates that the midpoint for potential refunds for 2015 returns is $879. In other words, half of the refunds are more than $879 and the other half are less.
Generally, taxpayers have a three-year “window of opportunity” to claim a tax refund if they haven’t filed a return. Otherwise, the money officially becomes the property of the U.S. Treasury. For 2015 tax returns, the window closes April 15, 2019 for most taxpayers. They have been advised to properly address, mail and ensure that the tax return is postmarked by that date.
But note that 2015 tax refunds may be held back for taxpayers who have not filed returns for the 2016 and/or 2017 tax years. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or prior federal debts, such as unpaid student loans.
By failing to file a tax return, a taxpayer could lose more than just the refund of taxes withheld or paid during 2015. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2015, the EITC was worth as much as $6,242. This credit helps individuals and families whose incomes are below certain thresholds.
The EITC thresholds referenced by the IRS for 2015 were:
- $47,747 ($53,267 if married filing jointly) for those with three or more qualifying children;
- $44,454 ($49,974 if married filing jointly) for people with two qualifying children;
- $39,131 ($44,651 if married filing jointly) for those with one qualifying child, and;
- $14,820 ($20,330 if married filing jointly) for people without qualifying children.
Current and prior year tax forms (such as the tax year 2015 Form 1040, 1040-A and 1040-EZ) and instructions are available at www.irs.gov on the Forms and Publications page or by calling the toll-free number, 800-TAX-FORM (800-829-3676).
Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the 2015, 2016 or 2017 tax years can request copies from their employer, bank or other payer. Those who are unable to get missing forms can order a free wage and income transcript by using the “Get Transcript Online” tool. Alternatively, they can file Form 4506-T to request a wage and income transcript.
Inform any clients who you think might be in risk of forfeiting 2015 tax refunds. It’s their money, after all, but not for much longer.