Have you ever dreamt that you found an unexpected source of cash only to wake up and find it was all an illusion? Well, if you’re one of the 1.2 million people that did not file their 2015 federal income tax returns, it could mean a dream true.
The IRS recently stated that there is approximately $1.4 billion in unclaimed refunds from the 2015 tax season – the largest amount since 2002. Affected taxpayers have until April 15 to file in order to claim their refunds (April 17 if you live in Maine or Massachusetts.). If you miss the deadline, any unclaimed funds become the property of the US Treasury.
Students, part-time workers, those with limited work hours and others may have overlooked filing. According to the IRS, the median refund from these unclaimed dollars is $879 – a nice sum for an unexpected payout.
If you’re concerned about sanctions for filing late, don’t be. By law, you have three years to submit your return without penalty if a refund is due. However, if you owe taxes from other years, your 2015 refund will be applied against that balance and reduce your tax bill. Keep in mind that your refund could be held for unpaid child support, overdue federal student loans or if you did not file 2016 or 2017 tax returns.
If you file your 2015 tax return and find that you owe, you can negotiate a payment plan with the IRS. Low and moderate income workers can take advantage of the Earned Income Tax Credit (EITC) and Earned Income Credit (EIC) which can reduce or eliminate your tax bill, with any leftover amounts refunded to you. The credit was worth up to $6,242 for the 2015 tax season, based on income and family size.
Everyone with earned income for the year is required to file a return, and doing so keeps you in good standing with the government. It also prevents someone else from using your identity to claim your refund – money withheld from your paycheck.
So, if you overlooked filing your 2015 income tax return it’s a good idea to file now. April 15 will be here soon and some of that $1.4 billion could be yours.