The IRS doesn’t usually have to make a case for people to grab their tax refund. Soon after filing season opens, millions of taxpayers file their returns to collect their annual windfall.
As of March 28, the IRS has processed more than 88 million returns, with an average refund of $3,170, up 3.9 percent from the same period last year.
But a lot of taxpayers don’t realize they have money due to them. For the 2021 tax year, the IRS estimates over 1.1 million people nationwide have unclaimed refunds totaling more than $1 billion, with the median refund totaling $781.
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In Maryland, close to 23,000 taxpayers are due a median refund of $827, according to the IRS. In New York, the agency said, an estimated 73,000 people may be due a median refund of $995, one of the highest amounts.
The IRS is also reminding people to double-check whether they are entitled to the 2021 pandemic-related recovery rebate credit. This credit, worth $1,400, was part of a trio of economic impact payments and is separate from the unclaimed amount noted above.
But a particularly important reason to not pass on filing for 2021 was the plethora of tax benefits that were available in expanded form that year, according to IRS spokesman Eric Smith.
“It’s your money. You should claim it,” Smith said.
Maybe you always file, but check with your young adult children, friends and extended family members to ensure they aren’t missing out on a refund they could use right now.
As the filing deadline approaches, here’s what you need to know about uncollected refunds.
Parents of a child born in 2021 who claim the child as a dependent on their income tax return may be eligible to receive a pandemic stimulus payment of up to $1,400.
Some people may not realize they qualified for the payment. For example, the IRS said taxpayers who added a dependent — such as a parent, a nephew or niece, or a grandchild — on their 2021 income tax return may be eligible to receive the credit.
By law, taxpayers usually have three years from the typical April filing deadline to claim a refund.
This means the three-year filing window closes this April 15.
If people missed the deadline, their money becomes the property of the U.S. Treasury.
The IRS examines the W-2 and 1099 forms and other third-party statements it receives from employers, banks and other sources to estimate the average number of people who might be due a refund and the amount.
Many low- and moderate-income workers may be eligible for the earned income tax credit (EITC), which for 2021 was worth as much as $6,728 for taxpayers with qualifying children. The EITC helps individuals and families whose incomes fall below certain thresholds.
If you’re a parent and your child worked during the summer or school year in 2021, have them check whether a refund is due.
Students or people working part-time may not have earned enough, so they may not have been required to file a return. Nonetheless, their employer may have taken out federal taxes. Refunds often result from overwithholding, meaning you gave the government more money than you owed. There’s no failure-to-file penalty if you’re due a refund.
The American Rescue Plan increased the amount of the child tax credit (CTC) while making it available for 17-year-old dependents and fully refundable for most families.
The credit itself isn’t new. It was created in 1997 and has always been meant to help struggling families. Before 2021, though, the credit was worth up to $2,000 per eligible child. The law increased it for 2021 to as much as $3,000 per child for dependents ages 6 through 17, and $3,600 for dependents ages 5 and under — but just for 2021.
There was also more money funneled through the tax credit to help parents offset work-related child-care expenses, while the tax credit for child and dependent care was temporarily increased from a maximum of $1,050 for one child and $2,100 for two or more children to $4,000 and $8,000. The credit was fully refundable, which means you get a refund, even if it’s more than what you owe.
You may be able to claim the child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work, according to the IRS.
You can obtain current- and prior-year tax forms and instructions by going to irs.gov and clicking the link for “Find forms & instructions.”
Keep in mind, however, that your 2021 tax refund may be held if you haven’t filed tax returns for 2022 and 2023. Additionally, any refund could be applied to past-due amounts you owe the IRS or a state agency. The money could be used to offset unpaid child support or other past due federal debt. But at least the refund will help with this debt. So file.
With the tax deadline rolling around soon, you may want to find a tax professional to help you complete a past return.
