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Mike DiSabatino CPA

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Don't Lose Your Refund

Don't Lose Your Refund
Don't Lose Your Refund 

Per the IRS, in 2011 approximately 1 million tax returns represented $1 billion in unclaimed refunds. As unlikely as this sounds, losing a refund could happen to you or someone you know. Here are some common causes of missing out on your full refund.

The Causes

You may be due a refund beyond your tax liability. While most tax credits can be used to reduce your tax liability down to zero, there are a few credits that allow you to receive money above the amount of your tax liability. The most common examples of these refundable credits are the refundable portion of the Earned Income Tax Credit, the American Opportunity Tax Credit and the Additional Child Tax Credit. Taxpayers often fail to take advantage of these refundable credits because they assume since they owe no tax they are not entitled to a refund.

Part time workers often lose refunds. Students and part-time workers often are the innocent victim of employer payroll systems. Payroll systems might assume you are working full-time and withhold pay from your wages at too high a rate. While part-time workers often owe no tax, these excess withholdings are only returned to you in the form of a refund when you file a tax return.

Seniors can be victims too. The same situation happens to seniors that have money withheld from their retirement fund disbursements and their Social Security checks. Often their income is low enough to not require filing a tax return. When withholdings are involved, the non-filing could create a lost refund.

Death and disability create tax-filing confusion. When the person who normally organizes and files taxes for the family becomes disabled or passes away, there is a possibility that timely filing of tax returns gets missed.

I need to be perfect. A number of taxpayers do not file on time because they are missing a piece of information. The dilemma to need to be 100% accurate before you can file your tax return, can be debilitating. Often this concern creates non-filed tax returns and refunds are lost.

What can you do?

You have three years. You have the later of three years from the original filing due date or two years from the time you paid any tax to claim your refund or file an amended tax return. This timeline is a strictly enforced by the IRS. If you miss the deadline by a day, you could be out of luck. For most of us this means tax years 2012, 2013, and 2014 are still open for refund requests by filing a tax return or amending a tax return filed in error.

Non-filer double check. If you did not file a tax return because you did not think it was necessary, conduct a review of your W-2s, 1099’s and other documentation. If there is money withheld, ask for assistance to see if a refund is possible.

Thankfully there are a few exceptions to these deadlines for bad debt, worthless securities, and for those unable to manage their financial affairs. But do not count on this as a fall back. If you have money withheld or if your tax return filing is not current, you could be a victim of lost refunds. If this could be you, now is the time to ask for help.

Please give us a call to discuss this or any of our other topics with you, so we can address your specific requirements.

DiSabatino CPA
Michael DiSabatino
651 Via Alondra Suite 715
Camarillo, CA 93012
Phone: 805-389-7300

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. All rights reserved.

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