The only thing that is certain in life is death and taxes. Additional certainties that should be added to that list are the fact that people who file on their own may not be maximizing their refund potential. Like people who don’t file taxes because they don’t make enough to meet federal threshold standards. They may also qualify for refunds too.
I myself didn’t realize when I was a working college student that I might have qualified for a larger return. This isn’t an isolated problem. There is a large segment of the population that are owed unclaimed tax returns by the IRS. Worse, they don’t even know it. By some estimates, the American public may unwittingly be owed over $2 billion in unclaimed tax returns.
That is just too much money to be leaving on the table. The average tax return is only about $2,000. Also, if you are self-filing incorrectly, or not filing because you don’t make enough money, you could be losing money. Here are some tips to help you reclaim unclaimed money and maximize your tax refund earning potential.
The Unclaimed
There are many reasons why people are unaware of unclaimed tax refunds that may be owed to them. Or, waste the opportunity to get one in the first place. The financial threshold for filing income taxes is about $10,000. Most people who make less than that amount are exempt from filing.
This can include students, low-wage earning employees, and self-employed independent contractors. Still, no matter your income tax bracket, everyone pays payroll, city, and sales taxes. Even if you fall under the financial threshold, you might be able to get a refund. Some people may qualify for earned income tax credits but won’t receive them because they think they make too little to file.
Also, you should know if any infirmed or deceased relation has a tax refund owed to them. If you can prove relation as a relative, dependent, status as a widow, or similar verification of relationship, you should be able to receive their refund. Be prepared for a lot of paperwork.
Self-Filing Mistakes
Most people who receive tax refunds might not be receiving the maximum amount possible. Earned Income Tax Credits, which reduce the amount of taxes owed, are available to individuals and couples based on geography and personal financial circumstances. If you are filing your own taxes, you must be aware of every possible tax credit that may benefit you. Otherwise, you are just missing out on money you won’t know is available.
Time Limits For Unclaimed Taxes
Believe it or not, the IRS has tax refunds mailed back to them because they couldn’t be delivered. Make sure that your address and personal information is correct when you are filing. Beyond that however, you need to file in a manner best suited to your circumstances. The IRS and United States government have no legal requirement to inform you of unclaimed taxes.
If you think that you may be owed an unclaimed tax refund, you may want to get the help of a tax professional. Or, you can contact the IRS and ask for the appropriate forms. You may have to resubmit new, amended tax returns and W-2s. It might even be necessary to ask for new W-2’s from previous employers.
Don’t wait if you think you are owed unclaimed taxes. There is only a three-year time limit for unclaimed refund redemption. Usually from the filing tax date in question to when you file an amended tax return. After three years, all unclaimed tax returns are legally reabsorbed back into federal coffers.
Read More
Why Your State Taxes Might Go Up
New Tax Laws Should Lower Your Odds of Being Audited
Why You Shouldn’t Wait to File Taxes (and When You Should)
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.
