2014 tax refunds: Claim them or lose them
I don’t know about you, but I try to never leave free money on the table. But about one million taxpayers who don’t file their 2014 1040s by April 17, 2018, will be doing just that. That’s a lot of people. Some of them may be your employees.
How much is at stake: According to IRS stats, $1 billion in refunds is waiting to be claimed. That’s not chump change. The median refund is $847, but if you qualify for the Earned Income Tax Credit, the credit was worth as much as $6,143 in 2014.
And here’s the thing: If this money isn’t claimed, it reverts to the U.S. Treasury—free money for Uncle Sam.
What to tell procrastinating employees
There are a ton of reasons why taxpayers don’t file their tax returns, ranging from oops, I forgot, to fear that they’ll owe a penalty. Rest a bit easier: Taxpayers who are owed refunds aren’t penalized for late filing.
You can help employees by providing them with copies of their 2014 W-2s. And, since the 2014 tax year was, by software standards, eons ago, you can provide them with papers forms to file by clicking here.
Paper forms must be properly addressed to the IRS and postmarked by April 17.
It’s reasonable to think that if taxpayers didn’t file their 2014 1040s, they also didn’t file their 2015 and 2016 1040s. So, as a motivator to get taxpayers to file those returns, too, the IRS will hang onto their 2014 refunds until they do.
In addition, the IRS may apply these refunds to other amounts employees owe to it or a state tax agency. Likewise, refunds may be used to offset unpaid child support or to pay past due federal debts, such as student loans.
Check 2018 withholding
According to the IRS, 2017 tax refunds exceed $2,800, which also isn’t chump change. Employees can cut down on the size of their tax refunds if their withholding more closely tracks their tax liability.
Employees can use either the worksheets that accompany the W-4 or the IRS’ withholding calculator. The calculator isn’t perfect—it’s not geared toward employees whose income fluctuates and doesn’t account for some pretax deductions, such as deductions into 401(k) plans—but it’s a good place to start.