IRS Alerts on Unclaimed 2021 Tax Refunds
The Internal Revenue Service (IRS) has issued a warning indicating that approximately $1 billion in tax refunds may revert to the U.S. Treasury if over 1.1 million taxpayers fail to act promptly. This situation arises from individuals who did not submit their Form 1040 Federal Income Tax Return for the 2021 tax year.
Refunds on the Table
Among the estimated unclaimed refunds, the median amount is reported to be $781, exclusive of any applicable tax credits. In California alone, over 116,000 individuals are owed nearly $922.3 million, with a median refund of $600.
Filing Deadline
Taxpayers typically have three years to file their returns and claim refunds. For the 2021 tax year, the deadline to obtain these refunds is April 15, 2025. To secure a potential refund, it is essential to file the tax return for 2021.
Potential Loss of Earned Income Tax Credit
Neglecting to file a return not only risks forfeiting the refund but also the possibility of claiming the Earned Income Tax Credit (EITC) that some may qualify for. For the 2021 tax year, the EITC thresholds were as follows:
- $51,464 ($57,414 for married couples filing jointly) for families with three or more qualifying children
- $47,915 ($53,865 for married couples filing jointly) for families with two qualifying children
- $42,158 ($48,108 for married couples filing jointly) for those with one qualifying child
- $21,430 ($27,380 for married couples filing jointly) for individuals without qualifying children
The EITC could be worth as much as $6,728 for eligible taxpayers in 2021.
Conditions for Refund Disbursement
Even if taxpayers apply for the 2021 refund before the April 15, 2025 deadline, the IRS has indicated that the refund may be withheld if returns for the 2022 and 2023 tax years have not been filed. Furthermore, if there are any existing debts owed to the IRS, state tax agencies, or unpaid child support, those debts may be deducted from any refund received.
Steps to Claim Your Refund
The IRS advises taxpayers to gather necessary tax documents, including Forms W-2, 1099, or 5498, before filing the federal tax return. Additionally, individuals can access their tax records and transcripts through the IRS’s Individual Online Account or request copies via mail using the Get Transcript by Mail tool.
Upcoming Tax Filing Deadline
For those looking ahead, the deadline to file taxes for the 2024 tax year is set for April 15, 2025. Ensure that all required documentation is prepared ahead of this date to avoid missing out on potential refunds.
