Collecting your old unclaimed tax refund and 3 other May tax moves
Wednesday, May 01, 2024
Tax Day 2024 is over for most of us. But Tax Day 2021 looms for some this month.
No, we are not in some tax time warp. And no, I did not have an adult beverage with my morning cuppa.
The tax reality is that this coming May 17, 2024, is the last chance for almost a million people to get federal refund money they were due back in 2021.
These individuals didn’t file a 2020 tax year return three years ago. And those three years are, according to tax law, the time limit they have to claim the uncollected tax cash.
But why is that three-year period this May instead of April? COVID-19.
The IRS delayed the tax deadline three years ago from the usual April due date to May 17, 2021, because of coronavirus pandemic complications.
Collect unclaimed 2020 refund money now. If you’re one of those nonfilers due a refund, you need to act by this May 17 to get your portion of the more than $1 billion in unclaimed refunds sitting in the U.S. Treasury.
This is your last chance. Miss this year’s deadline, and Uncle Sam gets to keep your money.
The amount you’re possibly relinquishing could be substantial. The median old unclaimed refund amount is $932. Yours could be less, but it could be more, possibly much more if you were eligible for an economic impact payment (EIP) payment that missed filing year. You can collect this special COVID relief money by claiming the Recovery Rebate Credit (RRC) on your belated filing this May 17.
Collecting an old federal tax refund, regardless of whether it’s enhanced by RRC money, is just one tax move to make this May. Here are three other steps to take care of this month to make sure your tax situation is indeed merry.
File your current return and make payment arrangements. Some folks have valid reasons for not filing a tax return. Owing money is not one of them. When you don’t file a 1040 because you can’t afford to pay your unexpectedly large tax bill, you only make things worse. The IRS’ failure to file and failure to pay penalties started accruing the minute after you missed this year’s April 15 Tax Day. The only way to stop them is to file and at least pay some tax due amount. then work out a way to pay the balance. The IRS offers a variety of options if you can't pay your tax bill in full.
Adjust your withholding. Regardless of whether you owed Uncle Sam or are due a refund, that’s an indication you should review your payroll withholding amount. When you have too little income tax withheld from your paychecks, you could end up in tax move #3 straits. When you have too much withheld, you must wait to get your money as a refund when you file. And sometimes, the IRS can’t meet its promised 21-day-or-less refund issuance goal.
Ideally, you want your tax liability every filing season to be as close to what’s withheld as possible. Get to that number by using the IRS online tax withholding estimator. Then use the data from the withholding tool to adjust your withholding amount by giving your payroll administrator the revised paperwork. Doing so earlier in the year will mean any changes will be spread across more pay periods. That’s particularly welcome when the adjusted withholding amount means less take home pay.
Add to your nest egg. If your adjusted withholding gives you more money each payday, consider shifting that amount to your workplace retirement account. Simply have your benefits office up your monthly 401(k) contributions to include the new withholding savings amount. Now the money is going to you, not the IRS, and your paycheck is the same amount as it was before. Most companies let their employees change their 401(k) contribution amounts at any time, but double check with your payroll and benefits administrators. If you can’t do it now, at least get the process in the works to up your workplace retirement plan contributions at the earliest possible time.
More May tax moves: I know, all y'all who finished your 2023 returns were hoping for a break from taxes. But taxes don’t take vacations, and if we want to pay as little as possible, we need to stay on top of our tax matters, too.
You can find even more May Tax Moves over in the ol' blog's right column. As usual, these monthly pieces of tax advice are listed under the countdown clock that's keeping track of the arrival of October's tax extension filing deadline.
And speaking of that countdown to Oct. 15, here’s a bonus 5th May tax move. Don’t wait until the fall to file your 2023 extended tax return. Getting it out of the way now will free up your summer for full-time fun, not tax worries.
If any of these tax actions apply to you, make them. Then, when you're done with all the tax moves that apply, have the merriest May ever.
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