The IRS may owe substantial amounts to individuals who failed to file their 2021 taxes, potentially ranging from hundreds to thousands of dollars. However, it’s crucial to act quickly, as the deadline to claim this money is swiftly approaching.
Currently, over 1.1 million taxpayers have not submitted their 2021 tax returns, which were due on Tax Day in April 2022. Consequently, the IRS is holding over $1 billion in unclaimed refund money that is set to expire on April 15.
The IRS indicates that the average unclaimed tax refund is approximately $781. This figure does not include refundable tax credits for 2021, such as the earned income tax credit, which can be as high as $6,728 for eligible individuals that year.
The announcement from the IRS on Tuesday did not highlight that the impending deadline also marks the final opportunity to claim stimulus payments provided by the American Rescue Plan (ARP) in 2021.
The ARP offered payments of up to $1,400 for individuals and $2,800 for married couples, in addition to $1,400 for each qualifying dependent. While most eligible recipients have already received their payments, individuals who did not file taxes for 2021 may still qualify for the Recovery Rebate Credit if they file by April 15.
As of now, both the IRS and the Department of Treasury have not responded to inquiries from Money regarding this matter.
Discover How Much Money the IRS Might Owe You
The median unclaimed tax refund stands at $781 per person, excluding various tax credits. However, it’s essential to note that the IRS will not automatically disburse this money. To receive any owed refund, you must file your back taxes before the upcoming deadline.
Back taxes for the tax year 2021 must be postmarked by April 15. Failing to meet this deadline may result in your refund disappearing; after three years of an unclaimed tax refund, it is officially considered “property of the U.S. Treasury,” according to IRS guidelines.
States with the largest median tax refunds awaiting claims include:
- New York: $995
- Pennsylvania: $993
- Rhode Island: $946
- Massachusetts: $936
- Illinois: $892
In contrast, California has the lowest median refund, recorded at $600.
It’s important to note that some taxpayers could potentially miss out on significantly larger refund amounts when considering possible stimulus money and the earned income tax credit.
Step-by-Step Guide to Claiming Your 2021 Tax Refund
To successfully claim your tax refund, you must file your back taxes for 2021. As per the IRS website, you can “file your past due return the same way and to the same location where you would file an on-time return.” There are exceptions for online filing through IRS Free File and the agency’s new Direct File program.
Several tax software programs enable you to file previous years’ tax returns; however, you may need to print and mail your returns or purchase a version of the software specifically for the previous year you wish to file. Additionally, tax professionals from established tax preparation companies, such as H&R Block or Jackson Hewitt, can assist you in this process.
In general, filing back taxes may involve more effort than filing for the current tax year.
Here’s a clear checklist of what you need to do:
- Gather all relevant income documentation. Review your records to identify what you have and what is missing for 2021. The specific documents required will depend on the types of income you earned that year, including W-2s for employee earnings, 1099-MISCs or 1099-NECs for gig or contract work, as well as 1099-INTs and 1099-DIVs for interest or dividend income.
- Request your tax transcript for any missing income details. If you cannot locate all your 2021 tax information, you can obtain your tax transcript at no cost from the IRS. Simply create or log in to your IRS online account and request a wage and income transcript, which will contain the necessary W-2 or 1099 information needed to complete your return.
- Utilize the correct forms for your tax return. Ensure that you are using the appropriate form for the year you are filing. You may require the 2021 1040, 1040-SR, or 1040-NR forms, all of which can be found in the IRS’s form archive.
- Mail your completed return to the correct IRS address. After finalizing your 2021 tax return, sign it and send it to the designated IRS address, which varies based on your location. If you have received specific filing instructions from the IRS by mail, be sure to follow those guidelines.
For additional help with your back taxes, consider calling the IRS’s toll-free number, 800-TAX-FORM, or visiting a nearby taxpayer assistance center.
It’s important to note that even if you are owed a 2021 tax refund, this may not necessarily lead to receiving a check in the mail. The IRS specifies that your refund may first be applied to any outstanding tax liabilities from previous years, unpaid child support, or any other debts owed to the federal government.
If you owe the IRS money from 2021, you may also incur penalties in addition to the original amount due.
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