2020 was a complicated year for people around the world. The effects of COVID were rampant and many people lost their jobs, homes and loved ones, so it is understandable that when tax season rolled around in 2021, when the effects of the devastation were fresh and in many cases still ongoing, many decided to not file their taxes unless they absolutely needed to.
Since filing taxes is only compulsory when you fall into certain income brackets and the pandemic gave a lot of exceptions to filers, it is perfectly understandable that some Americans decided to take something off their emotional plate and not file, especially if they feared that by filing they would have to pay instead of receiving a return, which would have been devastating for many on top of the situation.
When looking back The Internal Revenue Service has released an estimate showing that because this lack of filing, more than $1 billion in refunds remain unclaimed from this period alone. When divided amongst the more than one million people who did not file, the average unpaid refund for that year is $932, which could have helped many people then, and will probably be of great aid now in the post-covid economic climate we find ourselves in.
With the deadline to claim looming at May 17, it is important to note that this is a very generous extension given by the IRS. Originally, 2020 taxes had a last deadline in 2023 to be presented, but given the effects of the pandemic, the government decided to extend this deadline to 2024 to give more time to citizens to recuperate and get their affairs in order.
The IRS has a statute of limitations on refunds, typically lasting three years from the original due date of the return. If you’re owed a refund and you fail to file your tax return within that time frame, you forfeit the right to claim it. Instead, the funds are transferred to the U.S. Treasury. It’s advisable to file your taxes promptly to ensure you receive any refund you’re entitled to, but you will suffer no additional penalties for not claiming the money. Just remember that you need to make sure that you are not the one who owes money to the government before deciding not to file.
Other tax refunds you may be eligible for
But this is not the only refund taxpayers may be entitled to receive when claiming their 2020 tax return this May. You may also be entitled to claim The federal Earned Income Tax Credit (EITC), also known as the Earned Income Credit, which is a tax credit available to low- to moderate-income working individuals and couples, especially those with children. It is refundable, meaning that if the credit exceeds the amount of taxes owed, the taxpayer receives the excess as a refund.
It is safe to assume that if you are entitled to an overall refund on your taxes, you may be entitled to further refunds like this one, but just in case you are not aware of the conditions you would have to meet to claim this additional refund, you can find them here. To qualify for the EITC, taxpayers’ income must fall below the following thresholds:
- $50,594 ($56,844 if married filing jointly) for those with three or more qualifying children
- $47,440 ($53,330 if married filing jointly) for people with two qualifying children
- $41,756 ($47,646 if married filing jointly) for those with a qualifying child
- $15,820 ($21,710 if married filing jointly) for individuals without qualifying children
The maximum amounts of the 2020 credit that can be claimed are as follows:
- If you do not have qualifying children: $538
- If you have one (1) qualifying child: $3,584
- If you have two (2) qualifying children: $5,920
- If you have three (3) or more qualifying children: $6,660