If early birds get the worm, what do late birds get?
The IRS has put out the word that it’s holding more than $1 billion worth of unclaimed federal tax refunds. Whose money is it? Taxpayers who haven’t gotten around to filing their 2013 federal income tax returns.
Now is the time to remind employees to file their 2016 returns and returns for prior years, too.
Tick, tick, tick
Taxpayers have until April 18, 2017, to file their 2013 tax returns. The IRS estimates the median refund for 2013 is $763, so half are more and half are less. That’s not peanuts.
Even better: There’s no penalty for filing a late return, if you’re due a refund.
In cases where a tax return wasn’t filed, the tax code provides most taxpayers with a three-year window of opportunity for claiming their refund. If they don’t file a return within three years, the money becomes the property of the U.S. Treasury.
Remind employees to use 2013 tax forms. Old tax forms can be downloaded from the IRS’ website: www.irs.gov. Also remind employees to properly address mail and postmark their tax returns by April 18. Current IRS addresses are listed in the instructions for the 2016 Form 1040.
By failing to file a tax return, taxpayers may lose more than just their refund of taxes that were withheld or paid in 2013. Many low-and-moderate income workers may have been eligible for the Earned Income Tax Credit (EITC).
For 2013, the credit was worth as much as $6,044. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2013 were:
- $46,227 ($51,567 if married filing jointly) for those with three or more qualifying children
- $43,038 ($48,378 if married filing jointly) for people with two qualifying children
- $37,870 ($43,210 if married filing jointly) for those with one qualifying child
- $14,340 ($19,680 if married filing jointly) for people without qualifying children.
One tiny glitch
The IRS may hold a refund check if a taxpayer hasn’t filed returns for 2014 and 2015. In addition, a tax refund will be applied to any amounts still owed to the IRS or a state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.