Working Americans often complain about how much of their income is ravaged by the Tax Man. What would your life be like if you could keep about $20 of every $100 you paid into the federal government? Well, the IRS has just released data that shows there is an estimated $1.4 billion of money that is due Americans dating back to the 2015 tax year. As you would expect, the states with the highest populations – New York, Pennsylvania, Texas, and California – also have the greatest number of people who are owed this money. You read that correctly. The government owes you money. Millions of people, in fact.
How did this happen? The vast majority of people who are owed this largess are people who simply did not file a tax return for the 2015 tax year. There are people who only worked part time and decided the refund wasn’t worth the effort. The IRS requires that taxpayers file a return which activates the claim on the money owed to them. No return, no money. There are others who are owed money as a result of the Earned Income Tax Credit or EITC even though they did not earn any income for the 2015 tax year. Some students fall into this group of people.
Why would people just leave their refund in the hands of the government? Perhaps they don’t realize there is a three year time frame for them to file and grab the cash. This year, the deadline is April 15 for the 2015 tax year. If unclaimed, the government holds on to the money and it is lost forever. It’s hard to understand why someone would pass on free cash from the government, but they say it is a Brave New World out there.
If you are one of the lucky people who now realizes they forgot to file in 2015, there are a few things you need to know. First is that you have to have some proof of income. The currently accepted forms are the typical W-2, 1098, 1099, or 5498. If you earned $0 from employment but had income from interest or dividends you still may qualify. You should have gotten a form from your financial institution back then. If not, now is the time to check and request the form so you can file your refund and snare the money due you.
If you had a part time job where you worked as a contractor, you can estimate your income, or use your personal records, to file your 2015 return. The estimates will be good enough as long as your numbers are legit and the IRS will let you know if anything is amiss. In these cases you don’t want to use the creative accounting method since tax fraud if frowned upon by the IRS. Also, it can be particularly embarrassing if you lie about your income only to discover you will be getting a $22 refund.
The thing is, regardless of the amount you are eligible for there is no reason to not participate in the money grab if you qualify. Think about it this way. If you owed the government $22 they would chase you around the globe to get it from you. Even if it cost them more than the $22 you owed. That is why regardless of how much they owe you it is worth the minor effort.
You will not get a refund of less than $1 since they round down on their calculations. This is important because if you decide to file electronically you may end up paying money for the online process. So be sure to find a website that charges you $0 to file your 2015 return. If you cannot find one, then use the old fashioned method and put a 54 cent stamp on an old envelope you have lying around the house, jam the return in there, and drop it in the mail. Don’t buy the envelope from the post office unless you absolutely have to since that will cost you even more money.
The craziest part of all this is that you need to make sure you sign your return. Don’t get sloppy because the IRS will not approve a return that has not been signed. They will return your return, and then you have to sign it and send it back delaying the process. When it comes to meeting the deadline for the 2015 return it is a bit fuzzy whether re-sending a return that has been returned by the IRS after the April 15 deadline will be accepted. Do it right the first time and take part in the $1.4 billion refund offer that expires in less than a month.