Time to Claim $1B Unclaimed Refunds from the IRS is Running Out

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The IRS is reminding users to claim any unclaimed refunds before it is too late. The reminder to claim any unclaimed refunds from the IRS is not for the current year, but for previous years. According to the IRS, it has almost $1 billion worth of unclaimed refunds.

Unclaimed refunds from the IRS: who can claim them?

In a press release last week, the IRS announced that about 940,000 people across the nation risk losing their refunds for the 2020 tax year if they fail to file their tax returns by the May 17 deadline.

Collectively, the refund is worth almost $1 billion, with the median refund for 2020 being $932. Most of the unclaimed refunds from the IRS are because of the federal stimulus checks sent at the time of the COVID-19 pandemic.

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” IRS Commissioner Danny Werfel said in a statement. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds.

According to the IRS, Texas, California, Florida and New York have the largest number of taxpayers that could be eligible for unclaimed refunds from the IRS. In Texas, for instance, 93,400 taxpayers could be eligible for a refund, followed by California with 88,000, Florida with about 53,200, and New York with about 51,400.

To taxpayers who have already filed their return for 2020, but haven’t received the refund, the IRS says the funds of such taxpayers may be held if they haven’t filed a return for 2021 and 2022. Also, the IRS says any refund amount for 2020 could be applied toward money owed to the IRS or a state tax agency. The refund may also be used to pay for any unpaid child support or other outstanding federal debts, such as student loans.

What’s the deadline?

Taxpayers usually have three years to file and claim tax refunds. If a taxpayer fails to file a return during that period, the money is legally transferred to the Treasury Department.

Taxpayers got more than the usual time to file their return for 2020 because of the COVID-19 pandemic. The normal filing deadline to claim old refunds is around the April tax deadline, which for 2023 tax returns is April 15. However, the three-year window for 2020 unfiled returns has been extended to May 17, 2024.

So, taxpayers who missed the first and second stimulus checks from 2020 will have to file an amended 2020 income tax return by May 17. Those who missed the third stimulus check from 2021 have until April 15, 2025, to file an amended tax return for that year.

Also, taxpayers need to file an amended return if they believe they didn’t receive the full stimulus check amount. Taxpayers can visit their online IRS account to check the stimulus check amount they received.