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Susan Tompor: Big money awaits many who forgot to file 2017 tax returns

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

About 1.3 million taxpayers across the country might want to think about filing their 2017 federal income tax returns by May 17.

The Internal Revenue Service said tax refunds that total $1.3 billion are owed to people who have not filed a 2017 federal income tax return.

Yes, we're talking about unfiled tax returns from a few years ago that could trigger a decent tax refund. Yes, unfortunately you might not get to spend all that money since it might go directly to cover past due taxes, too.

The IRS estimates the midpoint for the potential refunds for 2017 to be $865 — that is, half of the refunds are more than $865 and half are less.

The IRS figures are an estimate and reflect W-2 withholding information. Maybe you forgot that you had taxes withheld from a part-time job. Or you thought you didn’t make enough money to be required to file a federal income tax return.

Some of the unclaimed refund money could belong to students, part-time workers and others who may have overlooked filing a return.

Even more money could be on the line for many low-income and moderate-income workers who could be eligible for generous tax credits, including the Earned Income Tax Credit. But you have to file a return to claim a credit.

You'd have to file that 2017 federal income tax return by May 17 to claim a refund or lose out on the cash.

Under the law, most taxpayers get a three-year window to claim a tax refund if a federal income tax refund was not filed earlier.

Michigan's total for unclaimed federal income tax refunds for 2017 is nearly $43.2 million for 43,100 people who have yet to file a 2017 return. The midpoint for potential refunds is $863.

Ohio's numbers have slightly more people who have unclaimed money. Ohio's total is nearly $47.9 million for 48,700 people with a midpoint of $852.

Some people are exempt from being required to file a federal income tax return but if they don’t file, some might lose important tax credits or refund money from federal taxes that could have been previously withheld from a paycheck.

Rules vary based on age and income.

 

If you’re under 65, for example, you probably don't have to file a tax return if your 2020 gross income was $12,400 or less as a single filer in 2020.The rules are different if someone can claim you as a dependent.

If you're under age 65 and someone can claim you as a dependent, you probably wouldn't have to file if your earned income was $12,200 or less or your unearned income was $1,100 or less. Other rules relating to your gross income can apply.

Not everyone who files a 2017 tax return, of course, will see refund money go directly into their wallets.

Federal tax refunds owed for 2017 may be held if the couple or individual has not filed tax returns for 2018 and 2019.

If you owe money for taxes or some other debts, you might not see the refund cash, either.

Federal income tax refund money will be applied to what you owe the IRS or a state tax agency. The refund also may be used to offset unpaid child support or past due federal debts, such as student loans.

Families facing financial difficulties also may want to consider filing 2017 returns as well.

"By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2017," the IRS stated.

Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit.

For 2017, the maximum credit was $6,318. The EITC helps individuals and families whose incomes are below certain thresholds. The income thresholds for 2017 were:

$48,340 ($53,930 if married filing jointly) for those with three or more qualifying children; $45,007 ($50,597 if married filing jointly) for people with two qualifying children; $39,617 ($45,207 if married filing jointly) for those with one qualifying child, and; $15,010 ($20,600 if married filing jointly) for people without qualifying children.

IRS Commissioner Chuck Rettig said in a statement: “Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window closes on May 17. We want to help people get these refunds, but they will need to quickly file a 2017 tax return.”

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