The IRS may have your money. The tax agency says that more than $1 billion in outstanding refunds remain unclaimed from the 2021 tax year. The agency estimates that more than 1.1 million taxpayers might have qualified for a refund but did not file a federal income tax return to claim it.
Tax Refund Deadline
If you are due a refund, typically, you must file a federal income tax return to get your money. Taxpayers usually have three years to file and claim their tax refunds—if you don’t file within three years, the money becomes the property of the U.S. Treasury.
The three-year window for filing your 2021 tax return would close on April 15, 2025.
An Exception
Things are a little different this year. Last December, the IRS announced that over one million taxpayers may have missed out on the Recovery Rebate Credit (RRC) claimed on their 2021 tax returns.
After reviewing internal data, the IRS determined that many eligible taxpayers filed a return but did not claim the credit. Qualified taxpayers are those who filed a 2021 tax return but left the RRC field blank or filled out $0 when they were actually eligible for the credit.
(Initially, the IRS said it would not calculate the RRC for you or correct your entry if you enter $0 or leave the line blank for the credit.)
As a result, the IRS said it would issue automatic payments to those taxpayers who filed a return and were eligible for the credit but did not claim it. While the amounts may vary, the maximum payment is $1,400 per individual. The estimated amount of payments going out will be about $2.4 billion.
Payments were scheduled to automatically go out in December 2024 and should have arrived by late January 2025. The payments were slated to be automatically directly deposited or sent by paper check (eligible taxpayers also received a separate letter notifying them of the payment).
That means that if the only credit or adjustment you were entitled to receive was the RRC, you should have already received it.
You May Still Need To File
That said, if you were entitled to credits other than the RRC—like, for example, the Earned Income Tax Credit (EITC), you’ll still need to file a tax return to claim it.
Some of those credits can be pretty sizable. For 2021, the EITC was worth as much as $6,728 for taxpayers with qualifying children. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for the 2021 tax year were:
- $51,464 ($57,414 if married filing jointly) for those with three or more qualifying children;
- $47,915 ($53,865 if married filing jointly) for people with two qualifying children;
- $42,158 ($48,108 if married filing jointly) for those with one qualifying child, and;
- $21,430 ($27,380 if married filing jointly) for people without qualifying children.
(You can find more information about tax credits, deductions and adjustments for the 2021 tax year here.)
You might also be entitled to a refund for reasons other than the EITC. Maybe you had too much withholding from your wages or paid too much in quarterly payments. You might not have filed because you had too little income to require filing a tax return, and you thought it wouldn’t make a difference. Remember, you can’t receive the benefit of refundable credits—or other tax breaks that might result in a refund–unless you file. And there is no penalty for failing to file when you are due a refund.
Of course, if you owe the feds money for student loans or back taxes, for example, or if your refund is otherwise earmarked for seizure, such as for child support obligations, any tax refund will be offset by the amounts owed. Additionally, if you are not compliant or have not filed tax returns for the 2022 and 2023 tax years, the IRS may hold your 2021 tax refund.
The Numbers
The IRS estimates that more than $1 billion in refunds remain unclaimed for the 2021 tax year, with a median refund amount of $781 for 2021—that means half of the refunds are more than $781 and half are less. This estimate does not include the RRC or other credits that may be applicable.
The IRS also estimated how many people in each state may be entitled to a tax refund. You can take a peek here:
If you live in one of the states bolded in green (New York, Pennsylvania, Rhode Island, Massachusetts, and Illinois), you’re in luck—those states are expected to have the highest median potential refund. California, Idaho, New Jersey, Minnesota, and Montana taxpayers are expected to have the lowest refunds.
Not surprisingly, taxpayers in the most populated states are missing out the most. More than 100,000 taxpayers in each of California and Texas may be entitled to a refund, followed by New York, Florida, and Pennsylvania. Taxpayers in less populated states may be missing out, too, with thousands of taxpayers in Wyoming, North Dakota, Vermont, South Dakota, and the District of Columbia also reporting potential refunds.
What You’ll Need
If you use tax filing software, you can likely find the 2021 return pretty easily—check around for a “prior years” tab or option.
If you intend to file on paper and need a copy of the 2021 tax forms, you can find forms and instructions on the IRS.gov Forms and Publications page (prior year). You can also call 800.TAX.FORM (800.829.3676)—it’s a toll-free number.
If you didn’t file in 2021, you might not have your tax and other records at your fingertips. Remember that you’ll need your forms W-2, 1098, 1099, or 5498 from 2021 to file. If you don’t have your old tax information forms, you can request copies from your employer, bank, or other payer.
You can also view, download, or print tax records and transcripts directly from the IRS website—just log in to your Individual Online Account on IRS.gov. (If you’re new to the website, you’ll need to create an account—here’s a look at how to get started).
If you don’t want to go online, you can file Form 4506-T with the IRS to request a wage and income transcript—that will give you the information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498, and IRA contribution information. But you should plan to wait—requesting by mail can take weeks. Going online is much (much) faster.
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