Don't Mess With Taxes

May 17 is the deadline this year to file your 2020 tax return and pay any tax you owe.

It's also the last day that 1.3 million people can claim their portion of more than $1.3 billion in taxes they overpaid during 2017 but never collected as tax refunds.

If you're one of those non-filers, you need to file that 2017 return and claim your refund by May 17. Federal law says that if a taxpayer doesn't file an old return within three years of its original due date — and that was April 15, 2018 for those 2017 tax returns — then Uncle Sam gets to keep the money. Forever.

And yes, even though May 17 is more than three years from the original old return's due date, it applies in these non-filing cases. The law says the three-year claiming deadline is the year's tax due date — May 17 this year — not strictly three calendar years.

$865 median unclaimed tax amounts: Meeting next month's old return filing deadline could produce a nice chunk of tax refund change.

The Internal Revenue Service says that the median unclaimed 2017 tax refund amount is $865.

Your languishing unclaimed amount, however, might be more, since that's just the midpoint for the potential old refunds. So half of the waiting refunds are less and, fingers crossed, half of them are more than $865.

Why people don't file: These old, unclaimed tax refunds are not a new occurrence.

Every year, the IRS announces that three years earlier, millions of folks didn't file tax returns that could net them billions in refunds and therefore didn't get that tax cash they were due back then.

There are many reasons for such oversights.

Sometimes people get busy and simply don't get around to sending their returns to the IRS.

Some don't realize they need to file at all. That's often the case with students and increasingly, gig workers. In both of these cases, these folks aren't in the main, traditional job earning pools, so filing is not necessarily routine for them.

Others know they are due a refund, but for some crazy reason (yes, I am judging!) think the amount is too small to mess with filing a 1040. If that's you, we need to talk.

And some people don't even know they might be due a refund. That's why even if you aren't legally required to do so, it's sometimes a good idea to file a tax return anyway.

Whatever the reason you didn't file your 2017 tax return back in 2018, the IRS wants you to come and get your cash.

That encouragement comes not just from me, but also the IRS' head honcho.

"The IRS wants to help taxpayers who are due refunds but haven't filed their 2017 tax returns yet," said IRS Commissioner Chuck Rettig. "Time is quickly running out for these taxpayers. There's only a three-year window to claim these refunds, and the window closes on May 17. We want to help people get these refunds, but they will need to quickly file a 2017 tax return."

Now or never: Although I (and Commissioner Rettig) mentioned it earlier, it's worth repeating. You only have three years to claim an old tax refund.

The countdown timer runs from tax due date to tax due date. So the three-year window to claim 2017 refunds due in 2018 closes in 2021.

And, again, the official Tax Day is the marker.

That means that since Tax Day 2021 was pushed to May 17, mainly for COVID-19 reasons (just like last year), it's the deadline to file that return you should have submitted back in 2018.

Don't miss it this time. It is your last chance to get that old refund.

What forms, how to file them: OK. You double checked your tax records and discovered you didn't file back in 2018. And it looks like you missed out on some cash.

But just how do you get that old refund?

Unfortunately, it's going to take a little bit of work. And you'll have to fill out that old form by hand instead of using tax prep software. Yep, that's right. Snail mail is required. There's no e-filing of old forms.

Start by getting tax year 2017 forms. They're available at IRS.gov's online forms and instructions page. Once there, click on the Find prior years forms, instructions & publications link.

Remember, since we're going back in tax time, you'll have a choice of 1040s. Changes under the Tax Cuts and Jobs Act (TCJA), which happened to become law in late 2017, prompted the IRS to go to just one Form 1040 and three schedules. But before that law's provisions kicked in the next tax year, you could file one of three 1040 versions: the long 1040, the slightly shorter 1040-A and, as its name indicated, the easiest 1040-EZ.

Generally, you should choose the simplest tax form for your filing situation. This pre-TCJA chapter from my tax book has details on why you might choose one 1040 form over the other two.

Once you decide which Form 1040 one to use, download it or call toll-free 1-800-TAX-FORM (1-800-829-3676).

In addition to the proper 2017 tax year forms to file, you'll also need your old tax documents. This includes things like your W-2, 1098, 1099 or 5498 forms. If you don't have copies in your personal files, the IRS recommends you first try to get copies from your employer, bank or other payer.

If you can't get those informational documents from those sources, you can order a free wage and income transcript by using the IRS' online Get Transcript tool.

Alternatively, you can file Form 4506-T to request a wage and income transcript. A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498 and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return.

Other non-filing years matter: While you're at it, you also might want to look at other tax years when you didn't file.

The IRS notes that if you're claiming your 2017 tax refund, that amount may be held if you also missed filing returns for 2018 and 2019.

Also be aware of any other amounts you currently owe the IRS, other federal programs or state agencies. Your old 2017 tax refund may be used to offset currently unpaid child support or past due federal debts, such as student loans.

But look on the bright side. If you're due a refund from 2017, the IRS also might be holding onto unclaimed refunds for you for 2018 and 2019 tax years, too. You don't have to wait until the last minute three years down the road to claim them.

Don't forget about the EITC: In finally filing your 2017 return, make sure you get the most of any possible refund. That means double-checking your eligibility that tax year to claim the Earned Income Tax Credit (EITC).

This tax credit — which reduces any taxes you owe dollar-for-dollar and is refundable, meaning you'll get money back even if you don't owe taxes — is available to lower- and middle-income taxpayers. However, the IRS says that every year millions of taxpayers overlook this valuable tax break.

For the 2017 tax year, the EITC was worth a maximum $6,318. Even if you don't qualify for that amount, it still could be worth claiming as long as your 2017 income met the EITC earnings thresholds. That tax year they were:

• $48,340 ($53,930 if married filing jointly) for those with three or more qualifying children;
• $45,007 ($50,597 if married filing jointly) for people with two qualifying children;
• $39,617 ($45,207 if married filing jointly) for those with one qualifying child; and
• $15,010 ($20,600 if married filing jointly) for people without qualifying children.

If your income and family circumstances back in 2017 allow you to claim the EITC on your late-filed return now, be sure to download IRS material related to the credit back then, too.

Don't forget state taxes: Most U.S. taxpayers live in states that also collect income taxes.

That means chances are good that a large percentage of folks who didn't file a federal return in 2017 also overlooked their state returns that year, since state and federal filings typically are connected.

Check with your state tax department about what you need to do about any old unfiled tax return at that level. It might could get you even more refund money.

Checking with your state tax office also is important this year since many have, like the IRS, changed their return filing deadlines this year.

Why to file now: Right about now, having read this far and still frustrated by this partially extended 2021 tax season, you're probably asking whether it's worth your time and effort to also mess with a three-year-old tax return.

My personal answer is yes, it's always worth getting some unexpected money. It's doubly worth it to keep it from simply reverting back to Uncle Sam.

And the unclaimed amounts could be especially welcome if you've lost income due to your job's closure during the COVID-19 pandemic.

More on those 2017 refund amounts: As noted earlier, the median return from the $1.3 billion waiting in the U.S. Treasury is $865. That means that half of the old unclaimed refunds are less than $865 and half are more.

In some cases, the refund amounts are much more.

Fittingly the median potential refund for residents of Kansas, which sits approximately in the middle of the United States, is $865.

But 23 other jurisdictions (22 states and Washington, D.C.) have a median mark topping $865. They are:

Even the smallest median refund amount, $727 in Idaho, is nothing to sneeze at.

You can see exactly where your state stands in the ol' blog's special web page showing the state-by-state breakout of 2017 tax year unclaimed refunds.

No penalties for refund claims: Finally, if you're concerned about facing IRS wrath for not filing back in 2017, don't worry.

There's no penalty for filing late when you're getting a refund of overpaid taxes.

Annual unclaimed refund issue: As I mentioned earlier, unclaimed tax refunds are common. I've been writing about this tax phenomenon as long as I've been blogging.

You can see what the numbers were in prior years in my previous posts on nonfilers due refunds —

• 2020 in conjunction with unfiled 2016 returns;
• 2019 in conjunction with unfiled 2015 returns;
• 2018 in connection with unfiled 2014 returns;
• 2017 in connection with unfiled 2013 returns;
• 2016 in connection with unfiled 2012 returns;
• 2015 in connection with unfiled 2011 returns;
• 2014 in connection with unfiled 2010 returns;
• 2013 in connection with unfiled 2009 returns;
• 2012 in connection with unfiled 2008 returns;
• 2011 in connection with unfiled 2007 returns;
• 2010 in connection with unfiled 2006 returns;
• 2009 in connection with unfiled 2005 returns;
• 2008 in connection with unfiled 2004 returns;
• 2007 in connection with unfiled 2003 returns; and
• 2006 in connection with unfiled 2002 returns.

You also might find these refund-related posts of interest:

• What to do if your tax refund is wrong
• Where's your tax refund? Use IRS online tool to find out  
• Tax refunds are nice, but savings provide a better payoff

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