Taxpayers who don't file a return lose the rights to their refund after three years.
The Internal Revenue Service (IRS) announced this week that more than a million taxpayers are running out of time to submit their tax returns and get unclaimed tax refunds from 2021.
More than 1.1 million taxpayers have unclaimed tax returns for tax year 2021 and face a looming deadline of April 15 to submit their tax returns, the IRS said Tuesday in a release. The IRS estimated that over $1 billion in tax refunds remain unclaimed by taxpayers who haven't filed their federal tax return, known as Form 1040, for the 2021 tax year.
The IRS analyzed the unclaimed refunds and estimated that the median refund for 2021 is $781, meaning that half of the refunds are larger than $781 and half are less. The estimate doesn't include the Recovery Rebate Credit or other credits that might be applicable to a given tax return.
Taxpayers typically have three years to file their tax return and claim their tax refunds by law, and if they fail to meet that deadline within three years, the unclaimed refund becomes property of the U.S. Treasury.
"By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2021," the IRS wrote.
"Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2021, the EITC was worth as much as $6,728 for taxpayers with qualifying children," the agency added.