Sponsors Spotlight: Don’t Lose Your Refund

Nancy Ekrem

The tax return due date often brings a sigh of relief to most taxpayers. Unfortunately, each tax day also closes the window on the possibility of claiming a refund. According to the IRS, in 2017, up to 1.4 million people representing $ 1.35 billion in unclaimed refunds had that money turned over to the US Treasury on Tax Day.

As unlikely as it sounds, the loss of a refund could happen to you or someone you know.

The causes

You may be owed a refund in excess of your tax payable. While most tax credits can be used to reduce your tax payable to zero, there are a few credits that allow you to receive money in excess of the amount of your tax payable. The most common examples of these refundable credits are the Earned Income Tax Credit, the American Opportunity Tax Credit, and the Child Tax Credit. Taxpayers often fail to take advantage of these refundable credits because they assume that they do not owe tax and are not entitled to a refund.

Part-time workers often lose reimbursements. Students and part-time workers are often the innocent victims of employer pay systems. Payroll systems may assume that you are working full time and withhold your pay at too high a rate. While some part-time workers are not subject to tax, these excess withholdings are only returned to you as a refund when you file a tax return.

The elderly can also be victims. The same happens to the elderly who have money withheld from their retirement fund disbursements and Social Security checks. Their income is often low enough that it does not require an income tax return. When it comes to withholding taxes, failure to file an income tax return could result in a loss of reimbursement.

Death and disability create confusion when it comes to filing income tax. When the person who normally organizes and declares taxes for the family becomes disabled or dies, there is a possibility that the timely filing of tax returns may be missed.

I must be perfect. A number of taxpayers do not file their return on time because they are missing information. The dilemma of needing to be 100% accurate before filing your tax return can be overwhelming. This concern often creates undocumented tax returns and lost refunds.

Confusion of payment of economic impact. With several rounds of Congress-approved dunning checks, it can be difficult to keep track of them to make sure you are receiving your payments and the payment amounts are correct. This is especially true if you don’t normally have to file a tax return.

What you can do

You are three years old. You have three years from the original filing due date or two years from the time you paid tax to claim your refund or file an amended tax return. This schedule is strictly enforced by the IRS. If you miss the deadline by one day, you might be out of luck. For most of us, that means the 2018, 2019, and 2020 tax years are still open to refund claims by filing a tax return or amending a tax return filed in error.

Double checking of non-declarants. If you didn’t file a tax return because you didn’t think it was necessary, take a review of your W-2, 1099, and other documents. If there is money withheld, ask for help to see if a refund is possible.

View the recovery rebate credit. If you have not received economic impact payments and have not filed a tax return, the IRS offers free options to prepare and file information to receive payment on how to file at www.irs.gov.

Fortunately, there are some exceptions to these deadlines for bad debts, worthless securities, and for those who are unable to manage their financial affairs. But don’t count it as a fallback. If you had money withheld or your tax return is not up to date, you could fall victim to lost refunds. Now is the time to act for 2018-2020.

– By Nancy J. Ekrem, CPA
Managing shareholder
PC of the DME CPA group
Certified Accountants and Business Consultants
[email protected]


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *