Each tax season, the list of people with unclaimed money grows, even though millions of taxpayers receive their tax return check on the scheduled date. The Internal Revenue Service (IRS) has more unclaimed money than expected. In 2020 alone, the tax collection agency stated that there were at least $1,500,000,000 of unclaimed refunds since 2016, the majority of them, in favor of residents of the state of California. Wondering how to find out if the government owes you money? We leave you the steps to find money without claiming IRS.
Most of the federal government’s unclaimed money is in the IRS. But where does the IRS’s unclaimed money come from? Of refunds not delivered to taxpayers, at least, in most cases. To fully understand this topic, there are a few questions to answer: what is a tax refund, and why the federal government might owe you money without your knowledge.
Unclaimed refunds are exactly that. You will see: when a taxpayer pays more taxes in the United States than they are entitled to, either due to the filing of a tax credit, there is an amount leftover in her favor. These amounts of money may be refundable, such as the child tax credit, or nonrefundable, such as the Hope Credit (education tax credit).
When there is a difference between what has been paid in taxes and what should have been paid, the IRS performs a series of calculations to obtain a total amount and thus write a check in favor of the taxpayer.Â
If that refund is not issued or, for whatever reason, is not delivered to the taxpayer, it becomes the IRS’s unclaimed money. The federal tax collection agency will keep that money for three years, which gives anyone the option of recovering the capital or using it to pay debts to the IRS.
Normally, when the IRS determines that there is a refundable sum of money in favor of the taxpayer, it sends a check for the full amount to the last address it has for the filer. This shipment is made through the United States Postal Service (USPS). If the taxpayer has registered a bank account, they could also issue a direct deposit. Hence the importance of keeping your data updated.
The time it takes for the tax refund to arrive depends on two factors: how the return was filed and what was the form of payment. Those who choose to pay taxes online can wait for the check or transfer between one and three weeks, at most. Those who prefer to mail their tax return instead could have to wait up to eight weeks. Most beneficiaries on the list of people with unclaimed money are still waiting for their check from the IRS. These are citizens who possibly changed their address and did not update it on the platform. When this happens, the USPS returns the check directly to the IRS office.
How do I know if I have unclaimed IRS money?
Everything will depend on your particular case, that is, on whether or not you filed a tax return:
If you filed your tax return online, by mail, or through tax programs; wait for your check or direct deposit. If three to eight weeks go by and you don’t receive a check in the mail or a transfer to the checking or savings account you have on file with the IRS, visit Where’s My Refund?
If you discover that the IRS owes you a refund and that they received your return, check that your taxpayer information is correct and free of errors. Register your bank accounts in the United States (the ones you use the most), check the balances of all the open accounts you have (in case the IRS sent a direct deposit and you haven’t found out), and update your tax address. You can do this online through Where’s My Refund?, by calling 1-800-TAX-FORM, or by filling out Form 8822.
If you didn’t file your tax return, don’t worry: you have the option to file late taxes. The IRS allows taxpayers to receive unclaimed money from other years as long as they file their pending returns within three years of their due date. To do this, you will need the latest W-2 or 1099 forms; in addition to completing a 1040 form.
The best way to avoid unclaimed money from the federal government is to keep an eye on your finances. Being organized, knowing how many bank accounts you have in your name, and keeping your information current with the IRS (especially your address, full name, marital status, number of children, etc.) will allow you to reduce the number of returned checks that have been issued by the Internal Revenue Service.
Another way to avoid having unclaimed IRS money is to file your tax returns online. This shortens the time it takes to send your refund, which could make you realize something goes wrong with your tax refund long before. One trick experts recommend to taxpayers is to register a bank account with the IRS and request direct deposit scheduling. Of course: remember to keep your account open and active so that the transfer does not become unclaimed money.
