IRS sitting on $1B that should be in 940,000 Americans' bank accounts

The clock is ticking on more than $1 billion that is currently being held by the Internal Revenue Service but could be in individuals' bank accounts if they act fast.

The IRS said Monday that the huge sum is the estimated value of tax refunds that may be due to almost 940,000 people who have yet to file their 2020 tax returns. The median amount due is $932 and the deadline to claim is just weeks away.

Under tax laws, returns must usually be filed and refunds claimed within three years, with deadlines around the time of annual return deadlines (April 15 this year). But the exceptional circumstances of the pandemic mean 2020’s deadline was extended to May 17, 2024. If missed, any unclaimed refund becomes the property of the U.S. Treasury.

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” said IRS commissioner Danny Werfel. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds.”

Along with missing refunds, low- and moderate-income workers may be eligible for the Earned Income Tax Credit, which for 2020 was as much as $6,660 for taxpayers with qualifying children.

However, those who have not yet filed for 2020 and also missed subsequent years may not receive their refund until that is remedied. And those who owe money to the IRS or a state tax agency will find any money due is used to clear these debts first and may be used to offset unpaid child support or other past due federal debts, such as student loans.

The highest number of people who are yet to file for 2020 are in Texas (93,400), California (88,200), and Florida (53,200), compared to just 1,700 in Vermont.

A recent poll from Bankrate.com asked what the more than two-thirds of U.S. adults who are expecting a tax refund for 2023 plan to do with it.