Are You Missing Your Refund?

By Marcia Richards Suelzer, Toolkit Staff Writer

Each year the IRS becomes the custodian of millions of dollars of other people's money because of undeliverable refund checks or unfiled claims for refund of withheld taxes. If you have moved within the past year or if you (or your children) had money withheld but did not file a tax return, then some of those millions may belong to you. If so, you'll want to take action to get your money.

Unclaimed Refunds

If you, or you child, did not earn enough to have to file a tax return, you may have opted to save some time and aggravation and not file.

Tip. For 2010 taxes (due April 18, 2011) you were required to file if your gross income was at least:

Higher amounts apply for those who are at least 65 and/or blind. For dependents, the filing level depends on the type of income. Dependents with only unearned income of at least $950, were required to file. If the only income was earned income, the filing threshold was $5,700. Those with both earned and unearned income had to file if their income was more than the larger of $950 or their earned income (up to $5,400) plus $300.

However, if you had federal tax withheld or if you qualified for a refundable tax credit, not filing meant that that you left your money in the IRS's bank accounts.

Tip. Most tax credits reduce the amount of tax that you owe, but do not reduce the amount below zero. However, a few tax credits are refundable. These credits can be claimed in full--even if that means that you get a refund if the amount you owe is less than the credit. These are some of the more common refundable credits:

Earned Income Tax Credit
Making Work Pay Tax Credit
Child Tax Credit (partially refundable)
Adoption Expenses Tax Credit
First-time Homebuyer Credit
American Opportunity Credit for college expenses (partially refundable) and
Excess Social Security Tax Withholding Credit

To collect your money, you must file an income tax return with the IRS within three years from the due date of the return. If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury. Don't worry about filing your return late. There is no penalty assessed by the IRS for filing a late return qualifying for a refund. You can get the necessary forms on the Forms and Publications page of www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Undeliverable Refunds

If you thought you were entitled to a refund check, but it never arrived, it may be have been returned to the IRS as undeliverable. Refund checks are mailed to your last known address, which is the address that the IRS has on file for you. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service. They can also be returned if the forwarding address you filed with the post office lapsed.

If you know the refund amount shown on your tax return, you may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months. If you do not know the refund amount shown on your return or if you do not have access to the Internet, you can call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.

Think Ahead. If you move, make sure the IRS has your correct address by filing Form 8822, Change of Address. This form is available on www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).

Or, you can avoid the risk of a missing paper check by opting to have your refund deposited directly into your bank account.

Posted August 7, 2011.