In a NutshellFor many taxpayers, a refund is the best part of tax season. Yet every year, plenty of people miss out on a refund because they don’t file a federal income tax return. Here’s how to find out if Uncle Sam owes you an unclaimed tax refund.
This article was fact-checked by our editors and Christina Taylor, MBA, senior manager of tax operations for Credit Karma.
Though millions of taxpayers get a small windfall every tax season, some people unwittingly leave money on the table in the form of unclaimed tax refunds.
If you have an active unclaimed refund waiting for you, the clock has started — you have a limited time to claim it.
Here’s how unclaimed refunds occur, how to find out if you have one and what you need to do if Uncle Sam owes you.
- What is an unclaimed tax refund?
- Other ways taxpayers miss out
- It’s up to you
- The clock is ticking on unclaimed refunds
- How to find out if you have an unclaimed refund
What is an unclaimed tax refund?
An unclaimed refund is exactly what it sounds like — a refund of federal income taxes that someone hasn’t claimed. Unclaimed refunds can happen for multiple reasons.
For example, if your gross income is less than the threshold for your age and filing status, you may not be required to file a federal income tax return. But if your employer withheld income taxes from your paycheck anyway, you might be due a refund of that money.
Or maybe you earned too little to have taxes withheld but still qualify for the earned income tax credit, a federal income tax credit designed for lower-income taxpayers. The credit is refundable, which means claiming it could get you a refund even if you don’t owe any taxes or the credit is more than what you owe — but the only way to get the credit is to file a federal tax return.
Other ways taxpayers miss out
Unclaimed refunds aren’t the only way you might miss out on getting money the IRS may owe you.
There are also undeliverable refunds, which happen when the IRS mails a refund check to an incorrect address. This often happens because you haven’t updated your address with the IRS, which mails checks to the last-known address they have on file for taxpayers.
If this happens, the postal service will return the check to the IRS and the burden will be on you to follow up with the agency about your refund. Fortunately, you can check this online by using the IRS tool “Where’s My Refund?” or by downloading the IRS2Go app to check your refund status.
It’s up to you
If the IRS owes you money in the form of a tax refund, it’s ultimately up to you to claim it.
“The IRS is not responsible for hunting you down if they owe you money,” says Mark Fried, financial planner and president of TFG Wealth Management in Bucks County, Pennsylvania.
Fried cautions that people should be aware of potential scams involving unclaimed refunds. He says the IRS website is your best bet for finding out whether you’re actually owed any money.
“There are other sites, but be careful because they may use your information to try and sell you something or charge you a fee to help you get your money from the IRS,” he says. “If they ask for too much personal information or require you to sign a document turning over the refund to them, I would be very suspicious. The AARP and Better Business Bureau are good places to check out sites.”
The clock is ticking on unclaimed refunds
The IRS issues alerts about unclaimed tax refunds to urge taxpayers who didn’t file a tax return or who never claimed their refund to do so. That’s because the clock is ticking, and you have a limited amount of time in which to claim your unclaimed refund.
If you haven’t filed a tax return, the IRS generally gives you three years from the original filing due date to file a return and claim any refund you’re owed. Typically, the deadline date is Tax Day of the due year. If you don’t file a return before that window closes, your money becomes Uncle Sam’s — permanently.
In March 2019, the agency estimated 1.2 million people who didn’t file their 2015 tax return were approaching the end of the three-year window in which to claim their refund. Those refunds totaled more than $1.4 billion, the agency said, with half the refunds at more than $879.
How to find out if you have an unclaimed refund
There’s really only one way to find out if you have an unclaimed refund waiting for you — file a tax return for the year in question.
To file tax returns from previous years, go to the Forms and Publications page on IRS.gov to access the forms and instructions you need, such as a 1040 or 1040EZ. If you don’t have your income forms, such as a W-2 or 1099, from the year you need, contact your current or former employer to get this information. Or you can request your information from the IRS — which is likely on file, as most companies are required to report it — via a copy of your wage and income transcripts.
Don’t hesitate to file a return for a tax year you may have missed, even if it’s been three years. While the IRS will penalize filing late if you owe money, there’s no penalty for filing a late return if you’re due a refund.
Not filing a return could potentially cost you hundreds, if not thousands, of dollars. So consider filing a federal income tax return even if you don’t owe — Uncle Sam may end up owing you!
Think about filing even if you don’t have the means to pay a tax professional, as the IRS provides resources that can help through its Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, Fried says. Both programs offer free tax preparation for those who qualify. Use the VITA/TCE locator tool on the IRS website to find a location near you.
And of course, you can use free online tax-preparation services to find out if you’re due a refund for the 2020 tax year, even if you didn’t pay or owe any federal income taxes for last year.
Remember, you have three years from its original due date to file a return to claim any refund you may be due. That sounds like plenty of time, but if Uncle Sam owes you money, why wait?
Christina Taylor is senior manager of tax operations for Credit Karma. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She co-developed an online DIY tax-preparation product, serving as chief operating officer for seven years. She is the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.