money Taxes: Time is running out to claim old 2018 tax refunds
The clock is running out for 1.5 million Americans to claim their old tax refund for 2018 — worth a median amount of $813.
The Internal Revenue said it is holding about $1.5 billion in unclaimed 2018 tax refunds that are owed to 1.5 million taxpayers. To claim the amount, those taxpayers must file their 2018 tax returns by this year's tax day on April 18. (It’s April 19 for taxpayers living in Maine and Massachusetts.)
Otherwise, that money goes to the U.S. Treasury.
“There is typically a three-year statute of limitations on unclaimed refunds (there is a 7 year exception for worthless securities and bad debt),” Eric Bronnenkant, CPA, CFP, Head of Tax at Betterment, told Yahoo Money. “If taxpayers do not file for a refund claim within that three-year time frame, the money is lost and the government gets to keep it.”
While the median unclaimed refund is $813, half of those 1.5 million taxpayers would get more. For instance, the median refunds in Alaska, Massachusetts, New Hampshire and Wyoming are $969, $908, $920, and $912, respectively, according to IRS data.
Many low- and moderate-income workers could be missing out on the Earned Income Tax Credit (EITC) in addition to any taxes withheld. The credit is designed to support individuals with incomes under a certain limit. For 2018, eligible taxpayers could get up to $6,431 in EITC, the IRS said.
“There are a variety of tax benefits that a person could be entitled to and missing out by not filing a tax return within the three years,” Bronnenkant said. “These include child tax credits, EITC, and education tax credits like the AOTC. Taxpayers who are eligible for the EITC may even get a refund that exceeds their withholding as it is a refundable tax credit. Filing a tax return is the only way to capture all eligible tax breaks including refundable EITCs.”
How to file an old return
You can’t electronically file your 2018 return, although you can e-file returns for tax year 2019 and later.
Per IRS rules, all 2018 returns should be filed with an IRS center. You can find your corresponding IRS facility listed on the last page of the current Form 1040 instructions document. Check the IRS Forms and Publications page or call 800-TAX-FORM (800-829-3676) to get current and prior year tax forms and instructions.
If you’re missing tax documents such as Forms W-2, 1098, 1099 or 5498, for the years 2018, 2019, or 2020, request copies from your employer, bank, or other payer. You can also request a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Taxpayers can also request a wage and income transcript by filing a Form 4506-T, according to the IRS.
One factor to consider: Taxpayers seeking their 2018 tax refund could have their checks withheld if they have not filed returns for 2019 and 2020. Additionally, money from your refund could be held by the IRS or state tax agencies to pay any unpaid child support or past due federal debts such as student loans.
Once you’re ready to mail your return, make sure to include the appropriate address, have enough postage, and get proof that you mailed it. According to the IRS, if your envelope contains more than five pages or is oversized (over a quarter-inch thick) it may need additional postage. You should also include your complete return address and have it postmarked by the due date.
Some post offices offer a “certificate of mailing” you can purchase as proof that you mailed your tax return on a certain date. Remember, paper returns are currently being processed on a first-in-first-out basis, so it may take several weeks or months to get processed. The sooner you file, the better.
Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.
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