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Filing a Late Tax Return to Claim Your Refund

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In a Nutshell

You can file a late tax return to claim your refund as long as the return is filed no later than 3 years after the due date of the return. If you have withholdings on your paycheck, there's a good chance you have a refund due. Even if nothing was withheld from your paycheck, there's a chance you have a refund due through "refundable tax credits."

Written by Attorney John Coble.  
Updated May 28, 2021


It's important that you file your tax return every year. For most taxpayers, filing a tax return is required by law. But, even when it's not required, filing is a good idea because you could have a refund due. Yes, it's possible to get a refund even if you have had no taxes withheld from your paycheck. There are tax credits, such as the earned income credit, that are called "refundable" tax credits. These can be paid to you even if you have had no income withheld or paid any estimated taxes. In 2019, the Internal Revenue Service reported that it had $1.4 billion in unclaimed tax refunds.

Should I File A Late Return To Get A Refund?

The general rule is that you aren't required to file an income tax return if you make less than your standard deduction. There are several exceptions to this rule. For example, you're required to file a federal income tax return if you have self-employment income, even when your total income is less than the standard deduction. That's because the self-employed have to pay the employee and the employer portion of their Social Security tax. If you aren't sure if you're required to file a return, you can use this IRS tool to find out. Also, even if you don't have a refund due, it helps to have filed over the past year since that effort helps the IRS know where to send your stimulus checks.

Refundable Tax Credits

You can file a late tax return to claim your refund as long as the return is filed no later than 3 years after the due date of the return. If you have withholdings on your paycheck, there's a good chance you have a refund due. Even if nothing was withheld from your paycheck, there's a chance you have a refund due through "refundable tax credits." These refundable tax credits include: 

  • The Earned Income Tax Credit (EITC). It ranges from $529 for a qualifying filer with no children to $6,557 for a qualifying filer with 3 or more children. The EITC isn't for just the poorest taxpayers. For example, a single filer with one child qualifies with an income up to $41,094.

  • The Health Insurance Premium Tax Credit. This is the tax credit under the Affordable Care Act (ACA) that can cover up to the complete cost of your health insurance. The average monthly cost of health insurance under the ACA is $450. That means this credit is worth almost $6,000 per year on average. The value may be much higher.

  • The American Opportunity Tax Credit covers qualified educational expenses. You could receive up to $2,500 to help with your higher education expenses.

  • The Additional Child Tax Credit can be up to $3,600 (the refundable portion) per qualifying child in 2021 and $1,400 for previous years.

Obviously, you want to take advantage of these tax credits. It's a lot of money that could go into your pocket. But, to get these tax credits, you need to file your tax return. If you failed to file for a tax year, you can generally only go back three years if you hope to receive a refund. If you missed a year, you need to go back and see if you're within the three-year window and file the return so you can get your money.  The quickest way to get your refund is to use e-file and direct deposit. It's much quicker than waiting for a refund check. You can use Where's My Refund to track when your refund will be available.

The Three-Year Rule

When does the three-year time limit start to run? If you failed to file your 2018 tax return, it's a good idea to prepare it to see if you have any refunds due. Since the due date was April 17, 2019 (the 15th fell on a weekend or holiday), you must file your return for the refund by April 17, 2022. For the 2020 tax year, the due date is May 17, 2021. The 2020 deadline was changed to allow more time since the COVID-19 pandemic. This means you have until May 17, 2024, to claim your 2020 tax refund. There's an exception to this deadline for 2020 tax refunds for residents of Louisiana, Oklahoma, and Texas. Due to a winter storm disaster in 2021, people in these states have until June 15, 2021, to file their 2020 taxes. Those states' residents have until June 15, 2024, to claim their tax refunds.

There are two other exceptions to the three-year refund rule. First, refunds due to worthless securities or bad debts are subject to a 7-year rule. Thus, if you are a resident of Texas who suffered losses from bad debts or worthless securities in 2020, you have until June 15, 2028, to claim that tax refund. Second, refunds can be claimed for any past year by those who are unable to manage their financial affairs due to physical or mental impairment. 

You're not going to be penalized for filing a late filing a tax return to get your refund. Failure to file penalties only affects tax years wherein you owe money to the IRS. Similarly, you aren't going to be arrested for filing an old tax return to get a tax refund. 

Not claiming your refund can be more consequential than the loss of money that's rightfully yours. If you owe taxes for other tax years, you’ll have to pay out of your own pocket. If you had filed your return for the refund, that refund could have been used to offset back taxes. Refunds can also be applied to student loans and child support arrearage. So, by not filing during the refund years, you'll end up owing more on those debts.

How Do I Prepare An Old Return?

Tax preparers may charge you more money for filing an old return. You can avoid this expense by preparing the return yourself. You reduce your risk of an audit by using a computer program like TurboTax or H&R Block's software to prepare your taxes. That's because these programs reduce the risk of mistakes. 

To prepare your return, you’ll need all your tax documents, including your W-2s and 1099s. Most people lose these for past years in which they failed to file. Thankfully, there's an easy way to get this information. The IRS won't give you copies of the documents, but the information that you need from those documents will show on your IRS wage and income transcript. The most convenient way to get your IRS transcript is to use the IRS Get Transcript tool on the IRS website. The Get Transcript site provides for online viewing of your transcript or online ordering of your transcript to be delivered by mail. 

When preparing a prior-year tax return, you’ll have to use the correct form for the year. For example, you can't use a 2020 Form 1040 for the 2018 tax year. You'll have to get a 2018 Form 1040. You can get the old 1040 by going to your local IRS office, using tax software, or getting it from a tax professional like a CPA. By far the easiest way to get an old tax form is to use the IRS Prior Year Forms site.

I Don’t Know How To Do My Own Taxes

If you don't feel comfortable doing your own tax preparation, you may need to hire a tax professional. But, that can be especially expensive for prior years. If you need tax advice, but can’t afford it, there may be a special program for you. There are such programs for low-income taxpayers, senior citizen taxpayers, and those serving in the military. There's a good chance one of the following programs will provide professional help or full preparation of your taxes for free:

Let’s Summarize…

If you're owed a tax refund from the government and you don't claim it within 3 years of the tax filing deadline, you may as well have written a check to the government for the refund amount. That's because it's your money and the government is simply holding it for you. By not filing to get your refund, you're letting the government keep the money. You probably need this money a lot more than the IRS does. Don’t forget that you must claim your refund within 3 years.



Written By:

Attorney John Coble

LinkedIn

John Coble has practiced as both a CPA and an Attorney. John's legal specialties were tax law and bankruptcy law. Before starting his own firm, John worked for law offices, accounting firms, and one of America's largest banks. John handled almost 1,500 bankruptcy cases in the eig... read more about Attorney John Coble

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