Have you ever seen those announcements from the IRS saying it has millions of dollars in unclaimed tax refunds? Earlier this year, the IRS announced that over $1 billion was unclaimed.
How can that be? Many people haven’t gotten around to filing taxes or have made tax mistakes. But the IRS isn’t heartless. You can correct your mistakes and possibly get some money back in your pocket from an unclaimed tax refund.
Unfiled tax returns
Are you one of those people who haven’t bothered with filing taxes for a few years because you have refunds coming anyway? The bad news is, if you don’t file within three years, the IRS gets to keep your money.
For example, I knew a commercial pilot stationed in Greece who, for about 10 years, had lots of withholding from his paychecks. Plus, he paid about $10,000 a year with each extension. But he didn’t file tax returns. When he finally caught up on filing taxes, he found he had been owed $10,000 a year worth of refunds. By not filing annually, he lost over $70,000!
Do you have open years that you were going to get around to filing someday? Make today the day to catch up on refunds for 2009 to 2011.
Correcting inaccurate addresses and other mistakes
When your tax return has errors, adjustments, or changes, the IRS sends you correspondence—including additional refund checks. Many of those are returned to the IRS as undeliverable. How could your tax return have been filed with a bad address? Here are four common errors:
1) Millions of people use tax software that rolls over last year’s data (either online or on your computer). So do tax professionals. Do you verify the mailing address on your tax return to ensure it is your current address? You should. If you’ve moved during the past year, you may have forgotten that the address on last year’s tax return is your prior address. And you may have forgotten to tell your tax pro, too.
2) When preparing your tax return, it’s natural for you use the address you’re living at when you file your return. Suppose you move a few weeks later. How will you get the IRS correspondence or refund checks? Many people don’t ever receive them. TaxMama usually suggests that the new address be used on the tax return. If there you don’t have a new address yet, open a mailbox account in the new area to receive your mail during the transition.
3) When typing in information, you can transpose numbers, letters, or digits, and autofill errors can also occur. Be sure to review ALL information before finalizing any tax returns or online orders.
4) When you move, it’s your obligation to notify the IRS about your new address. Filing a new tax return or responding to correspondence doesn’t tell the IRS computer about your new address when it comes to other years, tax periods, or tax issues. Only the change of address form alerts the whole system. If this applies to you, file Form 8822 now.
How can you tell if you have refunds coming to you? Read this article to see what you might have missed, and then call the IRS at 800-829-1040. You might have to file back tax returns, claims for refunds, or other paperwork. And remember to follow up with your state, too.
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.