A Guide to Unclaimed and Undeliverable Tax Refunds

Taxes are one of those things that almost no one can avoid, but luckily, the government has regulations in place to ensure that those who pay too much tax can recoup all that extra money in the form of a tax refund. However, the problem is that every year there are more than 1 million Americans who should qualify for a tax refund, but fail to do the few simple steps it takes to actually claim that refund.

In fact, the problem is so widespread that some estimates place the total amount of unclaimed tax refunds at well over $1 billion. Luckily, all is not lost as there are also systems in place to ensure that anyone who should be owed money can still collect their unclaimed tax refund. Therefore, if you feel that the IRS owes you money for taxes you've paid in the previous years, you'll need to take the following steps to ensure that you get what is rightfully yours.

How to Find and Collect Unclaimed Tax Returns

You are only required to pay taxes and file a tax return if you make over a specific amount in total yearly income. If your total yearly earnings are under this minimum amount, there is no penalty for not filing a tax return and this leads many people to simply avoid the headache that comes with doing taxes.

However, even if you don't file a tax return, there is still a good chance that at least some money was withheld from your paychecks for federal income tax. In this case, if your yearly income is under the minimum amount, you are entitled to be reimbursed for some or all of the taxes you've paid in the form of a tax refund check. Of course, the only way to actually qualify for the refund is to submit a tax return showing your total income and the amount you paid in taxes.

This means that if you have an unclaimed tax refund, the first thing you'll need to do is submit a tax return for the specific year. There is currently a three-year statute of limitations on unclaimed tax returns, which means that you must claim your refund within three years of the relevant tax return due date. In this way, you can actually be entitled for returns for up to the past three years as long as you submit your relevant yearly tax return forms within the specified time period.

Even if no taxes were withheld from your paycheck, you may still be entitled to a tax refund as part of the Earned Income Tax Refund program. Like with other unclaimed refunds, all you need to do is submit a qualifying tax return and then wait for your check.

Average Size of Unclaimed Tax Refunds

According to the IRS, the average unclaimed refund is around $750. Should you have failed to file a tax return in any of the three previous years, this means there could potentially be several thousand dollars just sitting there waiting for you to collect. Of course, $750 is just the size of the average check, which means that some people have unclaimed refunds that total several thousand dollars for just one year alone.

Nonetheless, the actual size of your return depends on your total income, the amount of tax you paid, your deductions and a number of other factors. This means that the only way to know exactly how much money you might be missing out on is to fill out the relevant tax return form.

Undeliverable Tax Refund Checks

More and more people are beginning to use the IRS' direct deposit option to receive their tax returns. With this option, there's no having to worry about your refund check getting lost as the money will automatically be deposited into your bank account. Furthermore, those who choose direct deposit also tend to get their returns much quicker than those who choose to receive a check.

Despite these major benefits, there are still a huge number of people who rely on the mail in order to receive their tax refund checks and this inevitably leads to some of these checks getting lost in the mail or otherwise not being able to make it to the intended recipient. This results in the IRS collecting several million dollars more each year due to undeliverable tax refunds.

The problem is that many people move to a new home and fail to inform the US Postal Service or the IRS, which leads to their tax refund checks being returned to the IRS as undeliverable. If your check is either returned to the IRS or simply gets lost in the mail, you have up to 12 months from the date the check was originally issued to request a new check. When requesting a check to be reissued, you will be required to confirm or update your address to ensure that the new check gets to you.

Time is of the essence when it comes to collecting both unclaimed and undeliverable tax refunds. Therefore, it is important that you act quickly to ensure you claim your money on time. Otherwise, the government will eventually end up benefitting at your expense.

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