Over $1 billion in unclaimed tax refunds is set to expire in just over 2 weeks, IRS says—here's how to claim yours

The Internal Revenue Service says more than $1 billion in unclaimed tax refunds from the 2020 tax year is sitting in its coffers. But the deadline to file a claim is quickly approaching.

Around 940,000 people across the U.S. have until May 17 to submit their 2020 tax returns and claim their portion of the unclaimed funds, according to the IRS. The government agency estimates the median refund is $932.

"There's money remaining on the table for hundreds of thousands of people who haven't filed 2020 tax returns," IRS Commissioner Danny Werfel said in March. "We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds."

Typically, tax filers have three years to claim old refunds by the April 15 tax filing deadline. However, the IRS extended that deadline to May 17 due to the Covid-19 pandemic

"People faced extremely unusual situations during the pandemic, which may have led some people to forget about a potential refund on their 2020 tax returns," Werfel said in the IRS's announcement.

The IRS says that your refund may be withheld if you haven't filed your 2021 and 2022 tax returns. Additionally, if you owe money to the IRS or a state tax agency, your refund will be applied toward that payment and may also be put toward any unpaid child support or other debts owed to the federal government that are past due.

How to claim your potential tax refund

If you think the IRS may owe you a refund, you need to file your 2020 tax return.

To do so, you'll need to get the necessary documents from the 2020 tax year. Here are a few common ones:

• Form W-2: This is issued by your employer and contains information about your income from the previous year, including any taxes that were withheld.
• Form 1099: This is typically used to report payments received from freelance work, but can apply to any non-employer income, including interest income.
• Form 5498: This is used to report your contributions to your individual retirement account.

If you don't have these documents already, you can request copies from your employer or bank. If you're unable to retrieve them that way, you can use the IRS's "Get Transcript Online" tool to order a free wage and income transcript, which will include the documents you'll need to file.

You'll want to act sooner rather than later. After the May 17 deadline, those unclaimed funds become property of the U.S. Treasury, according to the IRS.

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