When people think about the downsides of failing to file their tax returns, they often think of penalties, interest, and constant communication from the IRS—but what about missing out on tax refunds? If you’re owed a tax refund, it’s because you overpaid your taxes during the year or were entitled to extra credits or deductions. Failing to claim your tax refunds is essentially giving the government free money.
The good news is that you aren’t alone—and you have options. Per the IRS, by mid 2025, they were still holding onto over $1 billion in unclaimed tax refunds that were about to expire. Catching up on your tax returns doesn’t just get you back on track with the IRS, but it can also give you some of your hard-earned money back.
Key Takeaways
- You typically have three years from the original due date to file a return and still receive a refund.
- After three years, unclaimed refunds are gone forever.
- States have their own timelines for reclaiming missed refunds.
- Even if you don’t have your tax forms, you can still file old returns with your tax transcript or the help of a tax professional.
Why People Miss Out on Refunds
It’s surprisingly common for taxpayers to miss out on refunds. In most cases, unclaimed refunds come down to paperwork and timing. Here are some of the common reasons taxpayers don’t get refunds they’re entitled to:
Unfiled returns
Some people don’t file a tax return because they think they don’t need to or that it won’t benefit them. This is particularly common among students, retirees, and part-time workers—all of whom may have some source of income, but not as much as the average full-time worker. However, if taxes were withheld from their paychecks or if they qualify for certain tax credits, they may still be entitled to a refund.
For example, if a taxpayer changes jobs partway during the year and their income changes dramatically, their first job may have withheld too much in taxes. But if they do not file a return for that year, they don’t get a chance to reclaim that money.
Missing contact information
Unclaimed refunds may also be the result of outdated mailing addresses and no direct deposit. If the IRS sends a paper check to the wrong address, it will bounce back and often sit unclaimed for months or years. If someone has direct deposit but closes the account before their refund hits, the money goes back to the IRS until the taxpayer resolves the incorrect information.
Unprocessed returns
Sometimes, taxpayers file, but then, for some reason, the IRS doesn’t process the return. This can happen, for example, if the IRS thinks that the return was filed by someone other than the taxpayer due to identity theft or if the taxpayer didn’t file their previous years’ return. In both cases, if the taxpayer doesn’t reach out to the IRS, the return may sit in limbo, and the refund may never be processed.
Basically, tax refunds don’t show up on their own. The IRS will take steps to let taxpayers know that they may be owed money, but they aren’t going to chase you down if they owe you money. You need to file your returns and claim your refunds before the window closes.
How to Find Out If You’re Owed Money
If you haven’t filed your taxes for a few years and you’re wondering if you’re owed money, you can check the status of your tax account.
First, if you’ve filed your taxes but just realized that you never received your refund, you can use the “Where’s My Refund?” tool available on the IRS website. This is only available for those who have filed their return for the year in question, and if you’ve filed recently, it generally takes some time to update. This tool may let you know if your refund was mailed and returned or sent back to the IRS after a failed direct deposit.
If you haven’t filed for the years in question, you can sign into your IRS account online to take a look at your tax transcript. Look for 1099s or W-2s sent to the IRS on your behalf by employers, clients, banks, and others who may have paid you throughout the year in question. This gives you the chance to file your tax return using your tax preparation tool of choice or a tax preparer. Don’t forget to account for credits and deductions that may increase your tax refund.
Unsure how to navigate your online account or what documents have been sent to the IRS? You can also call the IRS directly to request a transcript. This may point you in the correct direction.
If you’re overwhelmed by these next steps, have multiple years of unfiled returns, or don’t know how to access or read your tax transcript, it may be time for a professional tax review. Working with a taxi professional allows you to take a hands-off approach to catching up and claiming your missed refunds.
What about state tax refunds? If you also did not file your state tax returns for the years in question, you could be owed money by the state. Check your online account at your state’s tax agency—in many states, this is the Department of Revenue.
Deadline Rules You Can’t Ignore
Refunds are subject to strict deadlines. Under Internal Revenue Code 6511, you have three years from the original due date of the tax return in question to claim a refund. Using the year 2021 as an example, as referenced earlier, tax returns for that year were due on April 15, 2022. Your ability to claim a refund would run out on April 16, 2025. After that date, no matter how much you were owed, the money is lost.
At the state level, deadlines vary. For example, in California, you have up to four years after the original return due date. The same is true in Michigan. Other states may have shorter or longer deadlines, so it’s important to work with a tax professional who knows the laws in your state.
Even if you are filing too late to claim a tax refund, you should still file a tax return. If you do not file, the IRS may create a Substitute for Return based on the forms filed by employers and other parties. An SFR does not account for credits and deductions, and as a result, it may show that you actually owe money. Filing your own accurate return prevents this from happening.
Filing your tax returns can also protect your Social Security and other benefits. If you are self-employed, your unfiled returns will not count towards your Social Security credits. This could reduce or eliminate future disability or retirement benefits.
Finally, you never know when you’ll need help in the form of an installment agreement, offer in compromise, or other type of tax relief. These relief programs generally require that you be completely up-to-date with all filings before you can apply.
What Happens to Expired Refunds
Once the three-year window has closed, all unclaimed funds revert back to the U.S. Treasury. That money is essentially a gift back to the federal government. If you owe money to the IRS and a refund could have lowered your tax debt, you lose that opportunity once the three-year window closes.
This highlights the importance of taking immediate action once you realize you’ve missed a filing deadline. The sooner you take action, the less likely you are to miss the deadline to claim a tax refund.
Steps to Claim Your Old Refunds
If you’ve realized that you’re likely owed tax refunds, you can get the process started to claim what you are owed.
- Identify the missing years. Check your filing history on your IRS account. If you see the years that you’ve missed, you know where to start your search for paperwork.
- Get your paperwork in order. Gather all of your W-2s, 1099s, and interest statements for the years that you’re filing for. If you can’t find your paperwork, you can use your tax transcript to reconstruct your returns. Not sure how to do that? Reach out to W Tax Group, and we’ll get you on track.
- File your returns. File your returns with the IRS, ensuring that you’ve included all necessary forms, income sources, deductions, and credits.
- Track your refund. Once you’ve filed your return, you can check the status of it on the IRS website. This will show you when your return is accepted and when to expect your refund.
- Follow up if needed. If your return is not accepted by the IRS, you may need to provide additional documentation. If your refund doesn’t show up when expected, you may need to follow up with the IRS to see if there’s an issue with your banking information or address.
While the process is slightly different for each state, most states follow a process fairly similar to the IRS’s.
Roadblocks That Can Keep You From Getting Your Refunds
Even if you file in time, there are hiccups that can keep you from receiving your money in a timely manner. If your refund is late or you’re unsure of why your return hasn’t been accepted, consider these potential issues:
- Offset to debts: Refunds may be seized to cover back taxes, child support, federal debts, or other debts, as long as creditors file the appropriate paperwork.
- Identity verification: The IRS may hold off on sending your refunds if they suspect a stolen identity. Verifying your identity can clear up this issue.
- Errors or mismatched income: Forgetting to include a 1099 or W-2 may affect your tax return and result in a lower refund. The IRS does send a notice when there are discrepancies between your return and documentation received from third parties.
When It’s Time to Talk to a Professional
Unclaimed tax refunds aren’t just about money. They’re also about complying with state and federal tax law, and the peace of mind that comes with knowing you’re up-to-date. While some taxpayers may only need a couple of forms and a few minutes to get caught up, others have more complicated tax situations.
If you have multiple years of missed returns, missing tax documents that are keeping you from filing and catching up, or other hurdles keeping you from claiming the money you’re owed, it’s time to talk to the team at W Tax Group. We can help clean up your history of missed tax returns and ensure that you aren’t leaving money on the table. Give us a call at 877-500-4930 or send us a message online to set up a time to meet with our team now.
Frequently Asked Questions
How do I know if the IRS owes me money?
If you’ve filed your returns but never received your refunds, you can check on the “Where’s My Refund?” tool. If you haven’t filed, you will need to file your missing returns to know for sure.
What’s the deadline to claim a refund?
You have three years from the original due date to file a missing federal tax return and get the refund associated with that year. On a state level, deadlines vary from state to state.
Can I still file if I’m missing my W-2s?
Yes. You can often get the missing information from your tax transcript or from your employers.
Will I get interest on an old refund?
No. Even if the IRS has had your money for years, you do not earn interest on unpaid refunds.
I just barely missed the three-year deadline. Are there any exceptions?
Unfortunately, no. Once the three-year window has passed, the refund money is the property of the U.S. Treasury. However, in some cases, you can claim refunds two years after you pay a tax, even if that’s beyond the three year deadline.
Sources:
https://www.irs.gov/newsroom/taxpayers-should-act-now-to-claim-more-than-1-billion-in-refunds-for-tax-year-2021-with-the-april-15-deadline-fast-approaching
https://www.ftb.ca.gov/help/disagree-or-resolve-an-issue/claim-for-refund.html
https://www.michigan.gov/taxes/questions/iit/accordion/filing/how-many-years-do-i-have-to-claim-an-153727
https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns
https://www.irs.gov/newsroom/people-first-initiative-faqs-past-due-tax-returns
https://www.irs.gov/filing/time-you-can-claim-a-credit-or-refund
https://www.taxpayeradvocate.irs.gov/tax-terms/refund-statute-expiration-date-rsed/
