Every tax year million of taxpayers leave unclaimed money for the Treasury.
Some taxpayers still file paper returns and do not request direct deposit. As a result, some errors are more likely to go undetected and some checks went uncashed. An estimated more than 2 million paper refunds, amounting to $1.2 billion, went uncashed over a 2 year period. As reported, each year, almost 700,000 of uncashed refunds were under $50. For tax year 2018, there were over 70,000 paper refunds filed.
When taxpayers do not file their tax returns they could potentially leave money to the Treasury. The IRS and the Treasury are using several avenues to get individuals to claim their stimulus payment because billion of dollars are still waiting to be paid. A taxpayer has to file a tax return for tax year 2020 to claim the recovery rebate credit.
The Internal Revenue Service reported that an estimated 11,000,000 taxpayers do not file their tax return each tax year. Many of them have unclaimed refunds at the Treasury. Those refunds could not be claimed after 3 years, except under special circumstances. In rare cases, a few taxpayers reported that they received refund for returns due past more than 3 years. Taxpayers have until May 17, 2021 to claim refunds for tax year 2017.
Some of the taxpayers could be children who worked and paid taxes while they were claimed as dependents by their parents. A number of taxpayers mistakenly believe that their children cannot file a tax return because they are claimed as dependents on their return.
The filing requirements for 2017 wages, as published by the IRS:
- If your filing status is single under 65: $10,400; 65 or older: $11,950.
- Head of household under 65: $13,400; 65 or older: $14,950
- Married, filing jointly under 65 (both spouses): $20,800; 65 or older (one spouse): $22,050; 65 or older (both spouses): $23,300.
- Married, filing separately any age: $4,050.
- Qualifying widow(er) under 65: $16,750 65 or older: $18,000.
Taxpayers in Florida who fall under the threshold required to file a return and did not file, but paid taxes, are among the estimated 89,600taxpayers in Florida who could lose $89,767,400.00 if they did not file their 2017 tax return by May 17, 2021 to claim a refund.
To illustrate, if your child made less than $10,400 in wages in 2017 and paid between $200 to 1,000 in federal taxes, he or she will get the amount of tax paid refunded, if he or she filed by May 17, 2021.
It is important to file your return for several reasons:
- You will need your tax return to file for student loan.
- You need to be in tax compliance for the past 6 years to obtain an abatement, an installment agreement, an offer in compromise from the IRS.
- You might need proof of tax filing compliance for transactions with different government entities: local, state, and federal.
- You will need at least 2 years of tax returns for real estate purchases.
- You might need your tax return to apply for a loan.
- and so on…
Be proactive when it comes to your tax return. It is advised to file your return even when you might not owe or do not need the refund because you never know when you would need proof of tax compliance or income. Do not wait until a proof tax compliance or proof of income is needed because it might cost you much more and further, you might not be able to get it a the time needed.
Do not act on the advice of non tax professionals. Every taxpayer’s situation could be unique. Most tax professionals offer free initial consultation.
Further reading:
2017 Publication 501.
Do you know that you could reduce your tax liability by proper tax planning strategy as individual or business owner?
We offer FREE initial consultation!!!
Recent Comments