How to Know if the IRS Owes You Money

Woman with baby on her lap working on a laptop
•••

Tara Moore / Getty Images

Getting a tax refund can be a nice surprise. Maybe you need the money for an emergency, want to pay down some of your debt or save, or want to buy yourself something you couldn't otherwise afford. A large number of tax refunds go unclaimed each year for a variety of reasons. Many Americans leave money on the table each year. Often, this is because they're due a refund but didn't file a return to claim it.

Learn more about why tax returns go unclaimed and how to find out whether you missed claiming one in the past.

Key Takeaways

  • Even if your income is low enough that you don't have to file a return, you may be owed a tax refund from the IRS.
  • Low-income taxpayers who qualify for the Earned Income Tax Credit are often due a refund.
  • You have three years after the tax filing deadline to file a return for that year and claim your refund.

How Tax Refunds Go Unclaimed

Millions of income tax refunds go unclaimed. Often, taxpayers don't realize they even have a refund coming, so they don't file a tax return. You may not have filed a tax return because of your income level. You aren't required to file a return unless you earn over a certain amount during the course of the tax year.

Whether you have to file a federal tax return in 2022 depends on your income in 2021. The income requirements vary based on your age and filing status. If your gross income is equal to the amounts the Internal Revenue Service (IRS) sets for your age and filing status, you must file a tax return.

  • Single: $12,550
  • Single and age 65 or older: $14,250
  • Married filing separately: $5
  • Head of household: $18,800
  • Head of household and age 65 or older: $20,500
  • Married filing jointly: $25,100
  • Married filing jointly, and one spouse is age 65 or older: $26,450
  • Married filing jointly, and both spouses are age 65 or older: $27,800
  • Qualifying widow(er): $25,100
  • Qualifying widow(er) and age 65 or older: $26,450

Just because you don't have to file a tax return, that doesn't mean you should skip it. You might be owed a refund even if your income is below these amounts. More often than not, taxpayers who don't have to file a return would receive a refund if they did.

In 2019, the IRS indicated that an estimated $1.4 billion in tax refunds was still waiting to be claimed for the 2015 tax year alone. Those refunds belonged to individuals who had yet to file returns for that tax year.

Whose Unclaimed Tax Refunds Are These?

There's a wide range of reasons why a tax refund might go unclaimed. There are some patterns, though, among those people who are owed unclaimed returns. The most common individuals who don't claim their refunds from the IRS include:

  • Students
  • Workers who work part-time or for only part of the year but have income taxes withheld
  • Self-employed workers with low earnings who make estimated tax payments but don't file a return because their earnings are below the threshold
  • Individuals who fail to file a final return on behalf of a deceased family member who is due a refund
  • Individuals who qualify for the earned income credit but don't file a return because their earnings are below the threshold

Claiming the Earned Income Tax Credit

A deduction is helpful for reducing the taxes you owe, but a tax credit is even better. It subtracts directly from the tax balance you owe, dollar for dollar, whereas a deduction simply reduces the total amount of income that's subject to tax.

If you are in a low-income household, the Earned Income Credit can help you by paying back some of the tax you already paid, or paying you even though you don't owe taxes. Whether or not you qualify for this credit is based on your filing status, household income, and the number of child dependents you have.

The maximum credit for filing taxes in 2021 is $6,728. This amount is refundable, which means the IRS will send you the money if you don't owe taxes or if you owe less than this threshold.

You could be shortchanging yourself out of a sizeable tax refund if you're eligible and don't file a return to claim it.

Note

If you are claiming the Earned Income tax Credit, and your filing status is Married Filing Separately, you must be eligible under the special rule in the American Rescue Plan Act (ARPA) of 2021.

How to Claim Your Unclaimed Tax Refund

You might want to find out whether the IRS owes you money. First, check your records to make sure that you've filed a tax return for each of the last three years that you had earnings.

Review your returns for the last three years to make sure they're accurate. Take time to find out whether you were eligible for the Earned Income Credit but didn't claim it.

If you didn't file a return in any of the last three years, you may still be able to claim your refund. The law gives you three years after the filing deadline (typically April 15) to file your income tax return and claim a refund. If you don't file within that time limit, you lose your chance to claim your money.

You can visit the IRS website or call 1-800-TAX FORM (800-829-3676) to get your tax returns for previous years. Claiming your refund could be as easy as filing returns for the last three years if you've overlooked a refund or if you qualified for the earned income credit but didn't claim it.

You can also check the Where's My Refund? tool on the IRS website if you were expecting a refund but never received it. Tax refund checks are mailed to your last known address if you don't request direct deposit into your bank account. They can be returned to the IRS if you move and fail to provide your new address to the IRS or to the U.S. Postal Service.

You can update your address online or by filing Form 8822, which is available online.

Article Sources