Unclaimed Income Tax Refunds by Taxpayers

Did you know that the average refund amount in 2023 was about $2,871?

Is there a tax refund waiting for you? You have three years to file a tax return and claim your refund and you will not face a late filing penalty for doing this! You do not need to file a tax extension if you do not owe taxes and instead expect a tax refund.

By failing to file a tax return, taxpayers stand to lose more than just their refund of taxes withheld or paid during the year as many low and moderate income workers may be eligible for the Earned Income Tax Credit or EITC. This is because many individuals wonder if they earn enough to file taxes and miss out on money that is owed to them.

Don't become a statistic! Read on for the latest data on unclaimed tax refunds due to wrong mailing addresses or incorrect bank account numbers. In addition, learn how to claim the refund you deserve! See options to receive your tax refund.

Bounced Refund Bank Deposit, Returned Refund Checks

Each year, there are billions of dollars of refund checks that are undelivered due to incorrect mailing addresses or wrong bank account numbers. What if you moved or changed bank accounts since you filed your tax return and the IRS does not have your new mailing address or new bank account number? Read on to learn how to update this information.

How to Claim a Missing Tax Refund Payment

If you are missing a refund, follow the steps below and read the examples for specific information that may pertain to your situation. The most common reason for a missing refund is a failed direct deposit; if the deposit fails, the IRS will attempt to issue you a check.

1. If your refund check was returned to the IRS, call 1-800-829-1040 to verify your mailing address - see IRS contact options.
2. To update your mailing address with the IRS, download and mail Form 8822 to the address listed on the tax form.
3. Next time, e-file your taxes and sign up for direct deposit. It is more accurate, safer, and you get your refund faster!

If you lost your refund check, you should initiate a trace with the IRS. You can use the IRS's automated system to start this by calling 1-800-829-1954. However, if you filed with the Married Filing Joint status, you can fill out and mail in Form 3911 - Taxpayer Statement Regarding Refund to begin the trace process.

What happens when I submit the wrong bank information on my tax return?

When you file your taxes and add a bank account for direct deposit, the IRS can use this information to issue your tax refund without mailing anything. If you provided the wrong information for a banking account after selecting direct deposit to receive your refund, this unfortunately cannot be changed with the IRS. Once your return is e-filed and accepted, the IRS will attempt to deposit the refund into the account. If there is an issue, the funds get returned to the IRS and your refund will be mailed to you as a refund check to the address submitted on your tax return.

The bank information you provided for your refund cannot be fixed by filing a tax amendment. When you file, be sure that your address is current and accurate when you submit your return. If your direct deposit is failed for any reason, the IRS will issue you a paper check to the address on record. This is also the information that will remain on IRS records until it is changed either by updating your address or filing a tax return the following year.

Why am I missing part of my tax refund?

Only the IRS - not eFile.com nor any other tax preparation platform - adjusts refunds. If you received a smaller refund amount than what was on your return, the most common reason for this is a refund offset. All or some of your refund may have been used to pay any past-due federal tax, child support, alimony payments, state tax, or other federal debts.

Generally, you will receive an IRS notice informing you of any changes to your refund or taxes due amounts. You can also find the reason via the IRS "Where's My Refund?" Tool.

For 2021 and 2020 Returns - Taxpayers who claimed an inaccurate amount for the first and second stimulus payments (2020) or the third stimulus payment (2021) would have seen their refund adjusted to the correct amount. If you still need to file your 2021 return, be sure to report your third stimulus payment amount exactly as you received it so your refund is not adjusted and delayed. For your 2020 return, enter your first and second stimulus payments amounts accurately to avoid adjustments.

Why is my refund so low?

If you received a raise or higher salary during the year, your income may have moved you up to a higher tax bracket. As such, if you did not adjust your income tax withholding, then this would effectively lower your refund since your withholding is based on a smaller salary. If your income situation changed during the year, utilize the free W-4 tools on eFile.com to create and submit a new W-4.

Other reasons for lower tax refunds include adjusted tax credits, new tax laws or reforms, or an IRS offset or adjustment described above and on the linked page. Do know that, in most cases, a large tax refund is your money that you handed over to the IRS throughout the year only to get it back as a refund.

What do I do if I did not receive a refund from this year? What about a missing refund from last year?

The IRS Where's My Refund tool is now showing the refund status for the 3 most recent tax years. You can try and get a refund status via the tool for your latest refunds.

If you cannot get any information via the IRS's Where's My Refund tool, you can also contact the IRS regarding this. The IRS may be holding your refund if they are waiting for identity verification or additional resources. Generally, they will contact you about this, but a letter they sent may have not been received, for example. There are also many instances where the refund simply fails to go through and you just need to contact the IRS to have them send it. This seems simple, but it is as if the IRS just forgot to "flip a switch" and send your refund to you.

View the latest e-file and direct deposit statistics.

Unclaimed IRS Tax Refunds

The IRS states that they have roughly $1.5 billion in unclaimed refunds each year. That is an estimated 1.5 million individual taxpayers who did not file their latest federal income tax return who were owed a refund. In addition, these taxpayers also likely missed a large amount of state tax refunds. You only have three years to file and claim these refunds; one this passes, it becomes too late to claim a refund for that IRS and/or state tax return and you may have missed out on a refund that was due you! Still, it is recommended to file the return regardless. Since it cannot be e-filed, see previous year tax forms you can fill out and mail.

How do I know if I need to file?

Maybe you thought your income was so low that you did not have to file taxes. Even if this was the case, did you know that you still might be eligible for a tax refund? For example, you might have had a job and taxes were withheld every month, but you did not file a tax return because you had too little income. You might still be able to claim this money in form of a tax refund. Or maybe taxes were not withheld, but you might be eligible for the refundable EITC (Earned Income Tax Credit). A refundable tax credit means that if you qualify for the credit and the credit is larger than the amount of tax you owe, you will get a refund for the difference. For example, if you owe $400 in taxes and you qualify for a $1,000 refundable credit, you will receive the $600 difference as a tax refund.

All these might mean a tax refund for you! See if you should or might want to file a tax return.

In addition, the IRS has estimated figures for those who failed to file a previous year state tax return, accounting for millions of dollars worth of state tax refunds. File your previous federal and state tax returns before you no longer have access to your hard-earned money!

When to File Taxes By

Generally, you have three years from the original tax return deadline to file the return and claim your refund. After three years, the refund will go to the government, specifically the U.S. Treasury. Don't miss out on the refund that is due you!

Refer to the table below for deadlines to claim tax refunds (or pay taxes owed) for a specific tax year.

Late Tax Return Filing Penalties

If you are eligible for a refund, there is generally no IRS late filing penalty for filing your return late after the IRS tax due date! Let's file your return and get your refund before it expires.

1. Use the FREE eFile.com tax calculator and estimate your tax refund.
2. Download and complete prior year tax return forms. Remember that you must use the tax form(s) for the year for which you are filing a tax return. Unfortunately, you can only do this by mailing in a paper tax return since the IRS does not accept previous year tax returns electronically.
3. If you owe taxes on your previous return and you need to calculate what penalties and interest you might owe the IRS, use our free tax penalty tool or PENALTYucator to estimate this.

Find out if you need to file a tax return or qualify for a refund by using our free tax educator tools. Learn about options to receive your tax refund via check or direct deposit. Once you have filed, check your current tax refund status.

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