Posted by Thomas G Kinsella, ATP

Unclaimed Tax Refunds: What do you do?

Unclaimed Tax Refunds: What do you do?

There is a limit on the time frame for which one can claim the refund for excess tax payment. You can only check if you have a tax refund if you have completed your tax return. Taxpayers get three years from the day of filing to amend any error on the previous year's tax return. Also, there is a two-year grace period to file a tax return if you did not file one to pay your tax return. 

Is it Possible to Claim Refunds on Returns You didn’t File?

Your claim to a valid tax return is hinged on filing a complete tax return. If the refund is for a year when you did not file a return, there is a two-year grace to file a tax return if the refund is for a year when you did not send in a tax return. The two-year counting commences on the tax date (April 15) that follows the year in question. 

For instance, assuming your boss withheld federal income tax from your paycheck during the 2019 calendar year.

  • Uncle Sam will consider the tax as paid on April 15, 2020

  • The IRS will also allow you to file a valid refund claim until April 15, 2022

How Long Do Taxpayers Have to Claim their refunds on Amended Returns?

If you filed your original return before the deadline and discovered an error on your tax return that will reduce your tax liability, you have three years to file an amended tax return. For your refund to be processed, it is essential to file an amended tax return. 

  • The three-year grace period starts on the tax day (April 15) in the year after the relevant tax year.

  • This period will typically include any time extension Uncle Sam grants you. 

As an illustration, using the 2020 tax year, 

  • You got an automatic extension for six months.

  • There was an original return filed on April 15, 2021, or the revised deadline

  • To get a refund, you need to have filed the amended return by mid-Oct, 2024 to get a refund. 

Missing the Window for a Tax Refund due to Disability: What to do:

As long as you could not file due to mental or physical impairment, Uncle Sam can peg the limitation period. This is an impairment that makes you unable to handle all your financial affairs. For one to qualify:

  • The impairment is projected to last for 12 consecutive months at least.

  • It can also end the person's life.

One needs to submit a written statement from the doctor proving that the illness or impairment is terminal. Uncle Sam will typically extend the limitation period by the period with which you suffered the limitation. 

What if Uncle Sam Extends the Assessment Period over the due date: Is Filing a tax refund possible?

The standard duration to claim a tax refund will not affect if Uncle Sam extends such an assessment period that applies to the tax year. Uncle Sam has three years from filing the tax return to examine and treat extra taxes. 

There are cases Uncle Sam might need a taxpayer to sign a stated agreement to extend the period. In cases like this, the taxpayer gets extra six months to file a claim for the refund for the tax year. 



Thomas G Kinsella, ATP
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