In a very welcome turn-around, Uncle Sam is actually urging American tax payers to ask for their money back. Yes, the IRS has said that the total amount of refunds that lies with it is mounting and the figure has touched a whopping $1 billion and moved beyond the magic number.
A million taxpayers could get refunds
According to officials, about a million Americans who may qualify for refunds may not have claimed their hard earned money back from the IRS. The IRS is saying that the $1 billion unclaimed refunds have accumulated since 2013, meaning that the tax payers have left their cash with Uncle Sam for about half a decade now.
What to do to claim tax refunds?
The most important and most significant thing for tax payers to understand is that you don’t have your entire lifetime ahead of you to file your refund claim. According to tax rules, the tax payers can file for a refund at any time within a three year period that follows the tax return date. To claim a refund from your tax return filed in 2013, your last date falls in 2018.
Over a billion dollars given back in refunds
The IRS has already given back about $127 billion in tax refunds by the end of February this year but it is still lower than the amount they sent back last year. According to officials, the tax refunds totalled some $265 billion last year, which represents a huge chuck of cash that, in the hands of the tax payers, could have been put to use.
Why the refund crops up in most cases
Typically, tax payers end up qualifying for refunds when their employers deduct tax from their salary before giving the pay check. At this stage, the tax deduction does not take into account the employees tax saving investments which can cut his bills by a significant amount. In effect, the employer has cut the full tax amount from the pay check although the employee may be able to avoid much of this tax. Once the employee has calculated how much he actually owes and compares it with the actuals paid, he should file a claim for a refund from the IRS. But this does not happen, in most cases.
The fact is that buying remains subdued right now because of consumer hesitation to spend money. However, if the tax payers simply claimed their refunds, their purchasing power can increase dramatically, allowing them to make critical purchases without worries.