Nearly 2 million students, retirees and other taxpayers stand to lose $2.5 billion in refunds if they don’t act quickly to claim the money.
The Internal Revenue Service said Monday that anyone who should have gotten a refund for taxes paid in 2000 but didn’t file a return must file and claim the money by April 15.
“Don’t wait until it’s too late,” said IRS Commissioner Mark Everson. “We want all taxpayers to get the refund they’re due.”
Half of those taxpayers could claim refunds of $529 or more, the IRS estimated. That calculation does not include the earned income tax, which could make the refund even larger for some low-wage workers.
“That’s not chump change,” said Fred Grant, a senior tax analyst at Intuit Inc., who urged taxpayers to file the returns before the law stipulates that the money goes to the U.S. Treasury. “I’m sure they’ll gladly take it,” he said.
Individuals owed a refund have three years to claim it. This year’s tax filing deadline is the last chance to claim 2000 refunds.
Students, retirees and anyone who worked part-time or for only part of the year are among those most likely to be owed money. Those individuals typically did not have enough income to be required to file a return, but they may have overlooked the taxes withheld from their paychecks or payments for self-employment taxes. Since they didn’t file a return, they never got the refund due them.
In 2000, the IRS did not require individuals with income less than $7,200 and married couples with income less than $12,950 to file a tax return. Those age 65 or older could receive a little more before they had to file a return.
Dependents, a category that includes many students, were not required to file a return that if they earned $4,400 or less or received $700 or less in interest, dividends and capital gains.
A refund for taxes paid in 2000 will be held at the IRS if the taxpayer did not file a return for 2001 and 2002, in case the taxpayer owes taxes for those years. There is no penalty for filing a late return to claim a refund.
Eric Hayes, senior tax analyst at TaxBrain.com, said a refund check is not the only reason to file a tax return. The IRS compares the reported wage information with the Social Security Administration, which gives taxpayers the opportunity to correct any errors and protect their long-term benefits. Also, an immigrant who files tax returns can use the documents as proof he met his legal obligations if he later tries to become a U.S. citizen.
Individuals who have defaulted on student loans can lower the balance owed, because the IRS will apply the return to any past due federal debt. The IRS may also divert the refund if the taxpayer owes unpaid child support.
Those who might have also been eligible for the earned income tax credit in 2000 will lose their refund after April 15. After the deadline, the credit would offset any taxes otherwise owed but the remainder of the credit would not be paid as a refund.
In 2000, individuals qualified for the earned income tax credit if they cared for two or more children and earned less than $31,152 or cared for one child and earned less than $27,413. Individuals without children who earned less than $10,380 may also have qualified for the credit.