Don't Mess With Taxes

Photo by Karolina Grabowska

Nearly 1.5 million people across the United States are due tax refunds they didn't claim in 2020 by filing a 2019 tax year return. They can get that money, which totals almost $1.5 billion, by filing that old return.

Even better, they don't have to mess with the old filing by this year's April 18 filing deadline. Instead, they get until July 17 to file for their 2019 refunds.

3-year window's opening and closing: Tax law gives taxpayers three years to file a return and collect the associated refund. The three-year filing period is from the original return's due date, which usually is April 15 or the next business day when Tax Day falls on a weekend or holiday.

But Tax Day in 2020 was unusual due to, you got it, the COVID-19 pandemic. Tax Day three years ago for the submission of 2019 returns was July 15, 2020.

Since the law starts the three-year claiming deadline on the tax due date, not strictly three calendar years, taxpayers who didn't file in 2020 and left their 2019 refund money sitting in the U.S. Treasury account have until July 17, 2023 to claim it. The two extra days are because, you got it, July 15 this year is on Saturday, pushing the three-year deadline to the following Monday.

But even though those three extra months to file seem far away, don't push it. If you are due a 2019 tax year refund and don't claim it by July 17, Uncle Sam gets to keep your money. All of it. Totally and forever.

"We recommend taxpayers start soon to make sure they don't miss out," said IRS Commissioner Danny Werfel.

$893 median unclaimed tax amounts: OK, now that the timing matters settled, it's time to get to the really important issue, the money.

The almost $1.5 billion unclaimed refund total could be a nice chunk of change for each owed taxpayer.

The IRS says the median unclaimed potential refunds for 2019 is $893.

Your 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 $893.

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, during the coronavirus' economic disruptions, 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.

"With the pandemic taking place when the 2019 tax returns were originally due, people faced extremely unusual situations. People may have simply forgotten about tax refunds with the deadline that year postponed all the way into July," Werfel said. "We encourage people to review their records and start gathering records now, so they don't run the risk of missing the July deadline."

What forms, how to file them: OK, you double-checked your tax records and discovered you didn't file back in 2020. And it looks like you missed out on some cash.

But just how do you get that old refund?

It's going to take a little bit of work. 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 2019 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 in the "Other Options" section right at top of the page. Then download the documents. You also can call toll-free 1-800-TAX-FORM (1-800-829-3676).

In addition to the proper 2019 tax year forms to file, you'll also need your old tax documents with the information necessary to complete the three-year-old return. This includes the usual form suspects like that year's W-2 and 1099 earnings documents, Form 1098 with data on possibly deductible mortgage costs, as well as Form 5498, IRA Contribution Information, if you contributed to a retirement account that might affect your filing.

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 tool at the Get Your Tax Record web page. There you'll find a link to the IRS' Get Transcript Online tool. A wage and income transcript shows data from information returns received by the IRS, such as the aforementioned forms, and that transcript information can be used to file your old tax return. For many, a transcript is the quickest and easiest option.

If you don't have online access or are just more comfortable using paper, you can file Form 4506-T to request a wage and income transcript. But do so soon. Written transcript requests can take several weeks to fulfill.

Also note that tax year 2019 returns must be filed with the IRS center listed on the last page of the current Form 1040 instructions. Some IRS locations have moved or been closed in the intervening years, so if you use the information on old forms, your finally-filed old return won't make it to the tax agency.

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 2019 tax refund, that amount may be held if you also missed filing returns for 2020 and 2021.

Also be aware of any other amounts you currently owe the IRS, other federal programs, or state agencies. Your old 2019 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 2019, the IRS also might be holding onto unclaimed refunds for you for subsequent tax years, too. You don't have to wait until the last-minute, three years down the road deadline to claim them.

Don't forget about the EITC: In finally filing your 2019 return, also make sure you get the most of any possible refund. That means examining 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.

For the 2019 tax year, the EITC was worth a maximum $6,557. Even if you don't qualify for that amount, it still could be worth claiming as long as your 2019 income met the EITC earnings thresholds. That tax year they were less than —

• $50,162 ($55,952 if married filing jointly) for those with three or more qualifying children;
• $46,703 ($52,493 if married filing jointly) for people with two qualifying children;
• $41,094 ($46,884 if married filing jointly) for those with one qualifying child, and;
• $15,570 ($21,370 if married filing jointly) for people without qualifying children.

If your income and family circumstances back in 2019 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 2019 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 get you even more refund money.

Yes, it's extra tax work. But for me, it's always worth getting some unexpected money. And it's doubly worth it to keep it from belonging to the government.

State-specific 2019 refunds: As noted earlier, the median return from the $1.5 billion waiting in the U.S. Treasury is $893. That means that half of the old unclaimed refunds are less than $893 and half are more. In some cases, much more.

Florida and Nebraska are right on the $893 median mark. Refunds due Maryland and Oklahoma 2019 return nonfilers are $897.

Unclaimed refund amounts break the $900 barrier in 21 other states shown below.

Of course, it would be great to get that nearly one grand in Alaska. But even the smallest median refund amount, $758 in Idaho, is nothing to sneeze at.

You can see exactly where your state stands in the unclaimed refund sweepstakes at the ol' blog's special web page showing 2019's state-by-state numbers.

No penalties for refund claims: Finally, if you're concerned about facing IRS wrath for not filing back in 2019, don't be.

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 below on nonfilers. They are amazingly consistent.

• 2022 in conjunction with unfiled 2018 returns; 
• 2021 in conjunction with unfiled 2017 returns;
• 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:

• Key federal tax dates in 2023
• Who does, and doesn't, have to file a tax return
• Why to file a tax return even if you don't have to

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