$1B Unclaimed Tax Refund – Deadline to claim return!

The federal government might owe you a tax refund from 2021. According to the latest news, the IRS has unclaimed $1 billion refunds with them which will become unavailable after two months. So, taxpayers buckle up to claim the unclaimed fund for the 2020 tax return. 

$1B Unclaimed Tax Refund

Recently, the IRS has revealed that they have an unclaimed tax refund of around $1 billion. This tax refund belongs to the 940,000 taxpayers of the United States who did not file their 2020 tax returns in 2021 due to any reasons. 

According to the IRS, among the 940,000 taxpayers, more than 88,000 hails from California. The IRS officials also revealed that the average median of the unclaimed tax refund is around $932. 

As per the IRS, the unclaimed tax refund also includes the recovery rebate credit, one of the three economic impact payments back in 2021 and 2020. 

The agency advised the taxpayers to claim the 2021 tax refund quickly as they cannot hold the unclaimed refund for longer as the IRS can only hold the tax refund for three years, which will be completed in two months. 

Afterward, the agency would transfer the unclaimed tax refund to the US treasury, if the tax refund status unclaimed. 

Deadline to claim the Unclaimed Tax Refund from 2021

As mentioned, the IRS can hold unclaimed tax refunds for only three years. The taxpayers have a three-year timeline to claim this refund from the original due to claim these refunds. 

$1B Unclaimed Tax Refund

In 2021, the IRS extended the last date to file the 2020 tax returns due to the pandemic financial crisis from 15 April 2021 to 17 May 2021. 

So, you have until 17 May 2024 to claim the unclaimed tax refunds of $1B from your 2020 tax returns. 

Taxpayers who are eligible to claim the 2021 tax refunds and Recovery Rebate Credit can file their 2021 tax return by 15 April 2025. 

How will you know that you qualify for the $1B unclaimed tax refund?

There is no other way to inquire about your eligibility for the unclaimed tax refund from the 2021 tax season. The taxpayers need to file the tax return for 2020 to know if they are entitled to any tax refund from the IRS for 2020 tax returns. 

However, if you have already received your tax refunds or recovery rebate credit for 2020, you are not eligible to claim the unclaimed credits. 

You can find out the amount of the Recovery Rebate Credit according to the tax year, you can check your IRS account or the IRS website to know about your recovery rebate credit assigned for the 2020 tax return. 

Required Documents to claim the $1B Unclaimed Tax Refunds

Taxpayers need to file their 2020 tax returns to claim the tax refunds, they would need the following form pages and documents:

  • W-2
  • Form 5498,
  • Form 1098, 1099

The IRS advised taxpayers to request the above forms from the bank or your employer if you can’t find them on the IRS website. 

You should also acquire an income transcript from the IRS and free wage (Form 4506-T) to utilize information to file your tax return for 2020. 

How to claim the tax refund from the $1B unclaimed tax refund from 2021?

Taxpayers are required to file their tax returns for the 2020 year through paper form. The electronic tax filing is unavailable for the 2020 year return. 

You would need to apply for 2020 tax returns through Form 1040 with the applicable schedules and mail it to the IRS address according to the location you lived in. 

Remember, filing the tax return does not mean that you are entitled to get unclaimed tax refunds as there are chances that the refund must be used for past-due federal tax, child support, student loans, state taxes, spousal support, unemployment compensation, or any other federal credits or debts. 

So, if you are speculating your 2021 tax refunds but did not receive any then there is a chance that your refund is offset by the IRS. Generally, the IRS will notify you about the refund offset. 

The unclaimed $1B tax refund is an opportunity for taxpayers to claim an almost $800 tax refund on their 2020 tax return. So, if you haven’t filed your 2020 tax return, this is your time to file the return by 17 May 2024 and get eligible for the 2021 tax refund. 

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