Don’t Wait Too Long to File for Your 2023 Tax Refund
Many taxpayers are surprised to learn that a tax refund does not remain available forever. If you are owed money by the IRS, there is a limited period of time to claim it. Once that deadline passes, the refund is generally lost permanently.
This issue most often affects taxpayers who have not filed a return for several years, individuals who mistakenly believe they are not required to file, students with part-time jobs, retirees with withholding, and workers who had excess withholding taken from their paychecks.
The Refund Deadline
The IRS sets a legal deadline for claiming a refund or tax credit. In most cases, the deadline is the later of:
• Three years from the date you filed your original tax return, or
• Two years from the date you paid the tax.
For most taxpayers who have not yet filed a 2023 tax return, the practical deadline to claim a refund is April 15, 2027. After that date, any refund associated with the 2023 return is forfeited to the U.S. Treasury.
Why Do Taxpayers Miss Refunds?
Many people assume that if the IRS owes them money, the IRS will automatically send it to them. Unfortunately, that is not how the system works.
The IRS generally requires a tax return or amended return to be filed before a refund can be issued. If no return is filed, the IRS may know that withholding was paid, but it will not issue the refund automatically.
Common situations include:
• A taxpayer had federal withholding from wages but never filed a return.
• A college student worked part-time and was due a refund.
• A retiree had withholding from pension payments.
• A taxpayer qualified for valuable credits but never filed.
• A taxpayer discovered a missed deduction years later but waited too long to amend the return.
Valuable Credits May Also Be Lost
The deadline does not apply only to withholding refunds. Tax credits may also be forfeited if a return is not filed on time.
For some taxpayers, credits such as the Earned Income Credit can significantly increase a refund. Waiting too long to file may result in losing those benefits entirely.
Filing an Amended Return
Sometimes taxpayers discover they missed income, deductions, or credits on a previously filed return.
A properly filed amended return can serve as a refund claim. However, amended returns are generally subject to the same refund statute deadlines. If the deadline has passed, the IRS will deny the refund even when the taxpayer was clearly entitled to it.
What If You Haven’t Filed for Several Years?
Even if some refunds have expired, it is usually still worthwhile to file delinquent returns.
Filing past-due returns can:
• Bring you back into compliance with the IRS.
• Stop additional failure-to-file issues from developing.
• Allow you to claim refunds that are still open.
• Prevent future refunds from being held by the IRS.
In many cases, taxpayers are pleasantly surprised to learn that they are owed money rather than owing money.
Take Action Before the Deadline
If you have not filed a 2023 tax return and believe you may be entitled to a refund, now is the time to act. Waiting until the last minute can create problems obtaining W-2s, 1099s, or other records needed to prepare an accurate return.
Remember, once the refund statute expires, the IRS cannot issue the refund, even if you clearly overpaid your taxes. The money becomes property of the U.S. Treasury.
If you have unfiled tax returns or believe you may be entitled to a refund from a prior year, please contact me directly for a free consultation.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer's situation is unique.