INDIANAPOLIS — The IRS announced that an estimated 1 million taxpayers may lose the opportunity to claim over a billion dollars in unclaimed refunds from the 2014 tax year.
For these taxpayers there’s still time to receive their 2014 refund by filing before 11:59 p.m. April 17.
“We’re trying to connect a million people with their share of $1.1 billion in unclaimed refunds for 2014,” said Acting IRS Commissioner David Kautter. “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. And there’s no penalty for filing a late return if you’re due a refund.”
Earned income tax credit
Among the taxpayers who did not file a 2014 tax return are approximately 22,700 Hoosiers who are at risk of losing an estimated $24,353,000 in unclaimed tax refunds.
Though the refund amounts vary per individual, the average refund left on the table by Indiana residents is approximately $1,073. Per the IRS, the median refund for Hoosiers is $878 with half of refunds estimated below and half above. Refund amounts are based on numerous factors including tax liability, tax withholding as well as what credits and deductions that the taxpayer may be eligible for.
Certain refund increasing credits (Refundable Credits), such as the Earned Income Tax Credit (EITC), may be available for eligible taxpayers. The EITC was created as a tax benefit for low- to mid-income families. The credit can increase 2014 refund amounts up to $6,143. The maximum credit amounts in 2014 were:
- $2 to $496 with no qualifying children.
- $9 to $3,305 with one qualifying child.
- $10 to $5,460 with two qualifying children.
- $11 to $6,143 with three or more qualifying children.
Not everyone qualifies for the maximum credit. Last year, the average credit was $2,407 and was available to families who had earnings of up to the following amounts during the 2014 tax year:
- $46,997 ($52,247 if married filing jointly) for those with three or more qualifying children
- $43,756 ($49,186 if married filing jointly) for people with two qualifying children
- $38,511 ($43,941 if married filing jointly) for those with one qualifying child
- $14,590 ($20,020 if married filing jointly) for people without qualifying children
Other credits
Taxpayers could also be forfeiting other refundable credits that would put more money in their wallets. The 2014 Additional Child Tax Credit could increase refund amounts by $1,000 per qualifying child. This credit is for families that earned up to $75,000 for single taxpayers and $110,000 for taxpayers who file Married Filing Jointly.
The American Opportunity Tax Credit (AOTC) is another refundable credit that taxpayers may have qualified for in 2014. Taxpayers who were qualifying students in a higher education institution, earned less than $90,000 if single and $180,000 if married in 2014 may be eligible AOTC. It’s up to $2,500 of which 40 percent of the credit is refundable, increasing refund amounts up to $1,000.
The IRS allows taxpayers a three-year window to file a tax return and claim a tax refund, or to file an amendment that would result in a refund. That window closes for 2014 on April 17; the end of the current filing season.
If a taxpayer is unable to get copies of missing income statements, such as W2s, 1099, 1098 or IRA contribution information from their employer, bank or other payor, you should use the IRS “Get Transcript Online” tool to obtain a 2014 wage transcript by visiting IRS.gov or file Form 4506-T by mail to request a transcript.
If you have someone prepare your return, make sure to take the following information to your preparer:
- A valid driver’s license or other photo ID card
- Social Security cards, a Social Security number (SSN) verification letter for all persons listed on the return
- Birth dates for all persons listed on return
- All income statements: Forms W-2 and 1099, Social Security, unemployment and other statements such as pensions, stocks, interest and any documents showing taxes withheld. If you run a business or farm, records of all income earned.
- All records of expenses, such as tuition, mortgage interest or real estate taxes, and if you run a business or farm, records of all related expenses.
- Copies of last year’s state and federal tax returns, if available
- Bank routing numbers and account numbers to direct deposit any refund
- Dependent child care information: name and address of who you paid and either the caretaker’s SSN or other tax identification number
- Dependent residency documents that proves the child has lived in your home such as a lease or landlord statement, vaccination records, school records, social services statement, medical records or a letter on the official letterhead from a school, medical provider, social service agency, or place of worship that shows names, common address and dates.
For more information please visit IRS.gov.
Sabalza, an enrolled agent, is director of tax education at Pro Tax Solutions.
