In a recent announcement that has caught the attention of taxpayers nationwide, the Internal Revenue Service (IRS) has issued an urgent notice regarding a staggering $95.7 million in unclaimed tax refunds.
Thousands of Americans may be missing out on money that is rightfully theirs, and time is running out to claim these funds before they are permanently transferred to the U.S. Treasury.
The Ticking Clock on Unclaimed Refunds
The IRS doesn’t keep your money forever. By law, taxpayers have a three-year window to claim their refunds before the funds become property of the U.S. government. For many potential recipients, that deadline is rapidly approaching.
“We see this situation every year, and it’s truly unfortunate,” said Marcus Reynolds, a tax professional with over 20 years of experience.
“People move, they change names through marriage or divorce, mail gets lost, or sometimes they simply don’t realize they’re entitled to a refund in the first place.”
The average unclaimed refund amounts to approximately $813, though individual amounts vary widely.
Some taxpayers may be entitled to several thousand dollars—money that could make a significant difference in their financial situations.
Why Refunds Go Unclaimed
There are numerous reasons why tax refunds might go unclaimed:
- Failure to file: Many people with lower incomes aren’t required to file a tax return. However, they may still have had taxes withheld from their paychecks, making them eligible for a refund.
- Address changes: The IRS may have tried to deliver a refund check, but it was returned due to an incorrect or outdated address.
- Direct deposit issues: Incorrect bank account information can cause refunds to be rejected and returned to the IRS.
- Missing documentation: In some cases, the IRS may need additional information to process a refund, but taxpayers never respond to these requests.
Sarah Jenkins, a 35-year-old healthcare worker from Ohio, recently discovered she was owed nearly $1,200 from a tax year when she worked part-time while attending nursing school.
“I honestly had no idea,” Jenkins said. “I was in school and working multiple jobs, and I guess I just forgot to file that year.
When I found out I could still claim it, I was shocked—that money helped me finally pay off my last student loan.”
Who Might Be Missing Out?
The IRS estimates that approximately 117,800 taxpayers are potentially due these unclaimed refunds.
The highest concentration of unclaimed funds is in California, Texas, Florida, and New York, though residents in every state may be affected.
College students, part-time workers, and those who frequent job changes are among the most likely to have unclaimed refunds.
Additionally, many eligible recipients of the Earned Income Tax Credit (EITC)—a benefit for working people with low to moderate income—fail to claim this valuable credit.
“The EITC is one of the most significant tax benefits available for working families, yet it’s also one of the most overlooked,” explained Denise Cortez, an IRS spokesperson.
“For tax year 2022, the credit could be worth as much as $6,935 for families with three or more qualifying children.”
State-by-State Breakdown
Some states have significantly higher amounts of unclaimed refunds than others. Here’s how the figures break down for the states with the largest unclaimed sums:
| State | Number of Recipients | Median Refund | Total Unclaimed |
|---|---|---|---|
| California | 13,265 | $879 | $11,657,935 |
| Texas | 10,840 | $923 | $10,004,320 |
| Florida | 9,475 | $801 | $7,589,475 |
| New York | 7,630 | $822 | $6,271,860 |
| Illinois | 5,915 | $787 | $4,655,105 |
| Pennsylvania | 5,280 | $756 | $3,991,680 |
| Ohio | 4,995 | $743 | $3,711,435 |
| Georgia | 4,850 | $802 | $3,889,700 |
| Michigan | 4,325 | $768 | $3,321,600 |
| New Jersey | 3,980 | $791 | $3,148,180 |
How to Check If You Have an Unclaimed Refund
The IRS has made it relatively straightforward for taxpayers to determine if they have an unclaimed refund waiting.
The primary tool is the “Where’s My Refund?” feature on the IRS website (IRS.gov) or through the IRS2Go mobile app. To use this tool, you’ll need:
- Your Social Security Number or Individual Taxpayer Identification Number
- Your filing status
- The exact refund amount shown on your tax return
For older refunds that may not appear in this system, taxpayers can request a tax account transcript, which shows all account activity, including refunds issued or returned to the IRS.
Thomas Wilson, a tax attorney based in Atlanta, recommends that everyone check, even if they don’t think they’re owed anything.
“I’ve seen countless situations where people were completely unaware they had money waiting for them. It takes just a few minutes to check, and the potential payoff makes it well worth the effort.”
Steps to Claim Your Refund
If you discover you’re owed a refund from a previous tax year, here’s what you need to do:
- File a tax return for the specific year in question. These forms can be found on the IRS website under “Prior Year Forms.”
- Mail the completed return to the address listed in the form instructions. E-filing is typically not available for prior year returns.
- If you’re missing necessary documents like W-2s or 1099s from that year, you can request wage and income transcripts from the IRS or contact your former employers directly.
- Be patient—processing prior year returns takes longer than current returns, often 8-12 weeks.
It’s important to note that if you’re due refunds from multiple years, you must file a separate return for each year.
The Bigger Picture: Unclaimed Money Beyond Tax Refunds
The phenomenon of unclaimed tax refunds is just the tip of the iceberg when it comes to money waiting to be claimed by Americans. According to the National Association of Unclaimed Property Administrators, approximately $49 billion in unclaimed property is currently being held by state governments.
This property includes:
- Forgotten bank accounts
- Uncashed paychecks
- Utility deposits
- Insurance payouts
- Stock dividends
- Gift cards with remaining balances
“Most people have no idea how much money is out there waiting to be claimed,” said Rebecca Nguyen, financial educator and personal finance blogger.
“I always tell people to check for unclaimed property in every state they’ve ever lived in—it’s like a treasure hunt that sometimes pays off big.”
Some financial advisors recommend making an annual practice of checking for unclaimed funds, both with the IRS and state unclaimed property offices.
Preventing Future Unclaimed Refunds
While claiming past refunds is important, preventing the problem from recurring is equally valuable. Tax experts suggest several strategies:
- File electronically: E-filed returns have fewer errors and process more quickly than paper returns.
- Use direct deposit: Direct deposit is the fastest and most secure way to receive your refund.
- Update your address: If you move, file Form 8822 with the IRS to update your address.
- Keep tax records: Maintain records of filing for at least three years.
- Set calendar reminders: Mark tax deadlines on your calendar each year.
“The best approach is proactive,” advised James Montgomery, CPA and tax strategist. “Developing good tax habits now can save you significant headaches—and potentially money—down the road.”
Impact of Unclaimed Refunds on Government Operations
When tax refunds go unclaimed past the three-year deadline, the money is transferred to the U.S. Treasury’s general fund, where it becomes part of the government’s operating budget.
While this represents a tiny fraction of federal revenue, the cumulative effect of unclaimed refunds over many years is substantial.
Some tax policy experts have advocated for reforms to make it easier for taxpayers to receive their refunds, including automatic filing systems used in some other countries.
“The current system puts the burden entirely on the taxpayer,” noted Dr. Elena Sanchez, professor of public policy at Georgetown University.
“Many other developed nations have simplified their tax systems so that for most citizens, filing isn’t even necessary. The government calculates what you owe or are owed automatically.”
Until such reforms are implemented, however, the responsibility remains with individual taxpayers to claim what is rightfully theirs.
A Second Chance with a Deadline
For those who might be owed money from past tax years, the three-year window for claiming refunds represents a valuable second chance. However, it’s a second chance with a firm expiration date.
“Don’t wait until the last minute,” cautioned Reynolds. “Gathering old documents and properly filing prior year returns takes time—time you might not have if you wait until just before the deadline.”
The IRS typically issues these notices annually, but the significant amount currently unclaimed has brought additional attention to this year’s announcement.
Changes to Tax Refund Processes
In response to the persistent issue of unclaimed refunds, the IRS has been implementing technological improvements to its systems.
Recent upgrades to the agency’s IT infrastructure, funded by the Inflation Reduction Act, aim to improve communication with taxpayers and reduce the number of unclaimed refunds in future years.
“We’re working on enhanced notification systems that will make it easier for taxpayers to know when they’re owed money,” said IRS Commissioner Daniel Werfel in a recent press briefing
. “Our goal is to get every dollar owed back to the taxpayers it belongs to.”
These improvements include expanded digital communication options, better tracking of returned mail, and enhanced data matching to identify potential non-filers who might be due refunds.
Frequently Asked Questions
Q: How do I know if I have an unclaimed tax refund? A: Check the “Where’s My Refund?” tool on IRS.gov or call the IRS refund hotline at 800-829-1954.
Q: How far back can I claim a refund? A: You generally have three years from the original due date of the return to claim a refund.
Q: Will the IRS contact me if I have an unclaimed refund? A: The IRS attempts to notify taxpayers of unclaimed refunds, but may not have your current contact information.
Q: Do I need to pay a fee to claim my refund? A: No. Claiming your refund directly from the IRS is free. Beware of services charging fees to “find” your refund.
Q: Can I still claim a refund if I didn’t file taxes in a previous year? A: Yes, but you must file a return for that specific year, even if it’s late.
The clock is ticking for those with unclaimed refunds.
If you think you might be among the nearly 118,000 Americans with money waiting at the IRS, taking action sooner rather than later could result in a welcome financial boost—money that is, after all, already yours.
