IRS: $1.5 billion in tax refunds will go to Treasury if unclaimed by July 15

The Internal Revenue Service (IRS) reminded taxpayers that this is the last year to claim their 2016 tax refund.

An estimated 1.4 million Americans are owed more than $1.5 billion in unclaimed refunds from 2016, which works out to a median amount of $861. Taxpayers generally have three years to file the federal tax returns to claim a refund. Otherwise, the money goes to the U.S. Treasury.

Read more: Here’s why the IRS would want to audit your taxes

“The IRS wants to help taxpayers who are owed refunds but haven’t filed their 2016 tax returns yet,” IRS Commissioner Chuck Rettig said in a statement. “Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window closes on July 15.”

To claim a refund, taxpayers must file their 2016 tax returns by July 15, the extended tax deadline this year because of the COVID-19 pandemic.

Old tax returns can’t be filed electronically; they can only be filed by paper. The return must be properly addressed and mailed with a postmark by July 15 to make the deadline. If you don’t have the necessary documents to fill out a 2016 return, you can use the online transcript tool at the IRS to retrieve W-2s and 1099s from previous years.

Read more: Coronavirus stimulus checks: What it means for your taxes

There is no penalty for filing late if you are getting a refund. But if you haven’t filed your 2017 or 2018 tax returns, your 2016 tax refund could be held up. If you owe money to the IRS or a state tax agency or have unpaid child support or federal debts, your 2016 refund could be applied to those instead.

Taxpayers stand to lose more than the refund of taxes they paid in 2016. Some low- and moderate-income workers may be eligible for the Earned Income Tax Credit, which was worth up to $6,269 for the 2016 tax year.

Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.

Read more:

• The IRS is failing to collect billions in back taxes owed by super rich Americans

• How the extended tax deadline affects payments, retirement contributions, and more

• Tax expert: Americans who don't file leave ‘billions of dollars’ on the table

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