Didn't File in 2010? You May Have Unclaimed Funds

Source: The Motley Fool.

The IRS has $760 million that it would love to dish out to taxpayers. This $760 million fund owes to an estimated 918,600 citizens who did not file federal tax returns for the 2010 tax year. It sounds a little crazy, but there are actually some people who are not legally required to file a tax return each year. These people had incomes below a certain threshold and may have been students or part-time employees who did not realize they could still receive a refund if they filed their tax returns.

The law specifies a three-year statute of limitations for claiming tax refunds. This means that the deadline for submitting a tax return for the 2010 tax year is April 15, 2014. What happens to funds that go unclaimed? After the three-year window passes, all unclaimed tax refunds are considered the property of the U.S. Treasury. Not claiming your refund is a lot like paying real money for an imaginary tax.

"The window is quickly closing for people who are owed refunds from 2010 who haven't filed a tax return," said IRS Commissioner John Koskinen in a statement. "We encourage students, part-time workers, and others who haven't filed for 2010 to look into this before time runs out on April 15."

For those who qualify for a refund, more than half will receive disbursements of over $571. If you did not file a tax return for 2010 because you had too little income, then hop to it before time runs out! Remember that even if you did not earn enough money to file, you likely still had wages withheld from employers or could qualify for other tax credits.

One of the most commonly missed tax credits for those who did not file a return is the Earned Income Tax Credit (EITC). This credit supports low- and moderate-income workers and provides a refund of up to $5,666. The 2010 income thresholds for the EITC were:

  • $43,322 for taxpayers with three or more qualifying children.
  • $48,362 for married joint filers with three or more qualifying children.
  • $40,363 for taxpayers with two qualifying children.
  • $45,373 for married joint filers with two qualifying children.
  • $35,535 for taxpayers with one qualifying child.
  • $40,545 for married joint filers with one qualifying child.
  • $13,460 for individuals without children.
  • $18,470 for married joint filers without children.

The good news is that there is no penalty for filing a late return for a qualifying refund. However, the IRS can withhold refund checks under certain conditions. If you did not file returns for 2011 or 2012 (and were obligated to do so), the IRS may not disburse your refund. Additionally, the refund amount gets applied to any taxes you may owe and can be spent toward unpaid child support before it gets to the taxpayer.

If you did not file a 2010 tax return, don't wait! It is easy to file a 2010 tax return. Taxpayers can access the appropriate forms on the IRS website or call 800-TAX-FORM (800-829-3676). If you are missing your 2010 W-2 form(s), you can request them from your employer and read this article about obtaining W-2s. If your previous employer is supremely uncooperative, you can request a free transcript from the IRS online or file Form 4506-T.

Take advantage of this little-known government tax rule
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

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