IRS says nearly $1 billion in unclaimed tax refunds to expire April 15

The Internal Revenue Service estimates that about 1 million Americans who are owed a tax refund don't file a return. The opportunity to file a back return ends after 3 years, when the potential refunds expire.

That means that refunds totaling just over $917 million that have gone unclaimed are about to disappear for as many as 984,400 taxpayers who did not file a federal income tax return for 2009. To collect the money, a back return for 2009 must be filed with the IRS no later than Monday, April 15, 2013.

The IRS estimates that half of the potential refunds for 2009 would be worth more than $500.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2009 returns, the window closes on April 15, 2013. The law requires that the return be properly addressed, mailed and postmarked by that date.

The IRS notes that there is no penalty for filing a late return qualifying for a refund.

The agency also reminds taxpayers who are seeking a 2009 refund that their checks may be held if they have not filed tax returns for 2010 and 2011. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refund of taxes withheld or paid during 2009. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2009, the credit is worth as much as $5,657. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2009 were:

• $43,279 ($48,279 if married filing jointly) for those with three or more qualifying children,
• $40,295 ($45,295 if married filing jointly) for people with two qualifying children,
• $35,463 ($40,463 if married filing jointly) for those with one qualifying child, and
• $13,440 ($18,440 if married filing jointly) for people without qualifying children.

State-by-State List of Individuals Who Did Not File a 2009 Return with a Potential Refund