The IRS has $1.1 billion in old tax refunds but ‘time is running out’ to make your claim

Here's what to do with the money you may save on taxes

About $1.1 billion in unclaimed federal income tax refunds are waiting for an estimated 1 million Americans who didn't file a 2014 federal income tax return, according to a recent report released by the Internal Revue Service. The deadline to collect those funds is no later than Tuesday, April 17, which is this year's tax deadline.

"We're trying to connect a million people with their share of $1.1 billion in unclaimed refunds for 2014," David Kautter, the acting IRS commissioner, says in the report. But, he warns, "time is running out for people who haven't filed tax returns to claim their refunds. Students, part-time workers and many others may have overlooked filing for 2014."

In cases where tax return was not filed, the IRS notes, most people are allowed a three-year window to claim their refund. There are, however, a few caveats. If you don't file within three years, the money becomes property of the U.S. Treasury.

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Also your 2014 refund could be withheld if you haven't filed tax returns for 2015 and 2016, the IRS explains. And if you owe the IRS or a state tax agency, have unpaid child support or have past-due federal debts, such as student loans, your refund could be applied to that instead.

If you haven't filed a 2014 return and owe taxes (as opposed to being owed a refund), you could be subject to the failure-to-file penalty, which could cost 5 percent of your unpaid tax bill each month it goes unpaid after the April deadline, and potentially up to 25 percent.

"In the meantime, the IRS will send several reminders to file," reports financial-software company Intuit Inc. If you ignore those, "they may file a substitute return on your behalf. And, while this may sound like a clever way to hand off your tax-prep chores to the government, keep in mind that government-prepared returns may not grant every deduction or credit you're entitled to."

We're trying to connect a million people with their share of $1.1 billion.
David Kautter
acting IRS commissioner

Eventually, non-filers who owe taxes will be subject to additional penalties, notes Intuit, and in some cases even criminal prosecution: "Delinquent taxpayers who owe more than $25,000 will eventually receive a visit from an IRS representative to collect payment."

If you hear from someone claiming to be from the IRS, though, first make sure that the contact isn't a scam.

If you haven't filed a 2014 return and meet all the criteria to receive a refund, you'll need to properly address and mail a tax return and ensure it is postmarked by the April deadline. Current and prior year tax forms, such as the 2014 Form 1040, 1040A and 1040EZ, and instructions are available on the IRS website. The agency says that half of the available refunds are for less than $847 and half are for more.

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