The law gives taxpayers who fail to file their income taxes three years to submit a return and claim a refund. Generally, the three-year countdown starts on the due date of the return, including extensions.
UPDATE: The Treasury recently announced tax changes and updates in response to COVID-19. Updates include an extension until July 15, 2020 for all taxpayers that have a filing or payment deadline that normally falls on or after April 1, 2020 and before July 1, 2020. Please see the latest information on tax deadlines and stimulus updates related to COVID-19 on the TurboTax Coronavirus Tax Center and detailed information about federal and state tax changes on our Coronavirus blog post.
Over a million Americans fail to file a tax return every year. By not filing, many of these people risk losing any refund they're owed, which averages more than $600, according to Internal Revenue Service estimates.
The law gives procrastinators three years to submit a return and claim a refund. The three-year countdown starts on the original due date of the return or the extension due date if an extension was filed. Late filers who owe no taxes don't pay any penalty, and might even be eligible to get credits beyond the money withheld from their wages.
Forgotten tax withholdings
The IRS sets minimum gross income levels below which taxpayers do not have to file a return. For example, in 2020, taxpayers under age 65 who were single and made less than $12,200, or heads of household who earned less than $18,350, had no obligation to file there 2019 taxes unless special circumstances exist.
These non-filers may have overlooked the fact that their employer withheld income tax throughout the year, which is money the IRS owes them. Additionally, their low income may qualify them for tax credits only available by filing a tax return. Non-filers also forgo the chance to receive the Earned Income Tax Credit, or EITC, by not filing.
So, just because you may not be required to file a tax return, doesn’t mean you shouldn’t. You could be missing the opportunity to get a tax refund.
Time matters with tax refunds
July 15, 2020 (usually April 15 in most years but extended in 2020), is the last day to file your original 2016 tax return to claim a refund. If you received an extension for the 2016 return then your deadline is October 15, 2020.
If you miss the deadline, any excess in the amount of tax you paid every paycheck or sent as quarterly estimated payments in 2016 goes to the U.S. Treasury instead of to you. You also lose the opportunity to apply any refund dollars to another tax year in which you owe income tax.
Under certain conditions the IRS will withhold your refund check. It can be used to pay any past-due student loans, child support and federal tax debt you owe. The IRS can also hold refund checks when the two subsequent annual returns are missing. That means you should file returns for 2017 and 2018 as soon as possible. For the 2017 tax year, with a filing deadline in April of 2018, the three-year grace period ends April 15, 2021.
Don't forget your credits
According to Cathy Tourbert of Pennsylvania-based Precision Tax & Business Service, tax payers who don't use a professional or online tax preparation service normally won't know what tax credits are available to them unless they read or follow tax-related news. Unclaimed 2016 tax credits represent part of the unclaimed $1 billion in the IRS's coffers. Those with low or moderate incomes may be eligible for the Earned Income Tax Credit even if they didn't have a tax bill. If your 2016 income fell below these limits, you might be able to claim EITC by filing a 1040EZ, 1040A or 1040 return by April 15, 2020:
- $14,880 ($20,430 if married filing jointly) and no qualifying children
- $39,296 ($44,846 if married filing jointly) and one qualifying child
- $44,648 ($50,198 if married filing jointly) and two qualifying children
- $47,955 ($53,505 if married filing jointly) and three or more qualifying children
Those needing to claim refunds for the 2016 tax year have other possible tax credits in addition to EITC they may be able to claim including:
- Additional Child Tax Credit
- American Opportunity Credit
- Adoption Credit
- Refundable Credit For Prior Year Minimum Tax
- Health Coverage Tax Credit (Form 1040 required)
- Credit for Federal Tax on Fuels (Form 1040 required)
Obstacles to your tax refund
One of the hills you have to climb to claim your refund is gathering the necessary documents. If you kept your financial records, you have an easy ascent. If not, then you must build time into your filing schedule to obtain a copy of your W-2 from your employer and any 1099 forms you're missing from your bank and other payers.
Get every deduction
TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.