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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 in a release on Tuesday. 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.
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The IRS is warning taxpayers they have until April 15 to file 2021 tax year returns and avoid losing their refunds. (Tasos Katopodis/Getty Images) / Getty Images)
"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.
The EITC has different phaseout thresholds depending on income and family size. The IRS' EITC thresholds for 2021 were $51,464 for taxpayers with three or more qualifying children; $47,915 for filers with two qualifying children; $42,158 for those with one qualifying child; and $21,430 for filers without qualifying children.
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Taxpayers who are eligible for the Earned Income Tax Credit miss out if they don’t file tax returns. (Kayla Bartkowski/Getty Images) / Getty Images)
Additionally, the IRS noted in its announcement that taxpayers who are seeking a 2021 tax refund may have their refunds held if they haven't filed tax returns for 2022 and 2023.
Gathering tax documents from a prior year to file a belated return can be challenging, though the IRS notes that there are ways they can get the information they need for past tax years, like 2021.
The IRS website's Individual Online Account can help taxpayers access transcripts of their past tax returns, tax account information, wage and income statements and verification of non-filing letters.
The agency notes that taxpayers who are missing Forms W-2, 1098, 1099 or 5498 can request copies from their employer, bank or other payers. Taxpayers who aren't able to get those missing forms and can't access the website's Individual Online Account can get a tax return or tax account mailed to them using the Get Transcript by Mail feature or calling the automated phone transcript service.
Taxpayers can access tax forms from past years through the IRS. (Daniel Acker/Bloomberg via Getty Images / Getty Images)
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Another option is for taxpayers to file a Form 4506-T to request a wage and income transcript – though these requests can take several weeks and the IRS recommends taxpayers try other options first.
Taxpayers looking to file taxes from a prior year like 2021 can access the appropriate version of the Form 1040 from whichever year they need on the IRS websites' forms and instructions page or by calling the agency's toll free line 800-TAX-FORM (800-829-3676).