Nobody wants $760 million? IRS poised to keep unclaimed tax refunds

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IRS to keep nearly $760 million in unclaimed tax refunds

John Roberts reports from Atlanta

Taxpayers are about to give the federal government a big, fat Easter egg -- more than three-quarters of a billion dollars in tax revenue that the government technically doesn't deserve.

At issue is refund money that has been sitting in the federal coffers since the 2010 tax year, but that no one has claimed.

In total, $760 million is owed to 918,600 people. By statute -- which gives taxpayers three years to claim that money -- the millions become the property of the federal government at midnight on April 15.

It's not too late to claim the refunds, but the window is almost closed.

"It does happen every year," said James Robertson, a tax preparer at H&R Block in Marietta, Ga. "There is that three-year filing window in which you have to file a return and claim a refund. And if you don't claim a refund within that three years, it becomes property of the Treasury."

While $760 million is a lot of money, it's not a record. In 2009, taxpayers left $917 million on the table. For 2013, it's estimated that figure could top a billion dollars.

So who is owed this latest batch of money? People who didn't file a tax return for 2010, but are eligible for a refund.

They include students who worked jobs and paid taxes, but didn't reach the income threshold requiring that they file a return. They may not realize that they had taxes withheld and can get that money back.

Retired individuals also likely make up a large percentage of those owed money, as do low-income earners who don't know they are eligible for the Earned Income Tax Credit.

The Earned Income Tax Credit could be worth as much as $5,000 to a taxpayer, depending on their situation, Robertson said. He said in 2010, married couples filing jointly could still earn up to $48,000 and qualify for the credit, depending on certain factors like the number of dependents they have.

Not everyone will have such a princely sum waiting for them in the vaults of the IRS.

The top average refunds are $649 in Alaska, $648 in Wyoming, and in $640 in Washington.

California leads the way with the highest number of people owed money -- 85,500 -- followed by Texas and New York, with 80,600 and 57,400 owed money, respectively.

In order to get their money back, taxpayers would need to file a return for 2010 by the April 15 deadline. That means finding the necessary W2's, paystubs and other documents, and filling out the appropriate paperwork. Paying a tax preparer to get a basic return together will cost about $200.

But those owed a typical refund would walk away with money in their pockets -- a lot of money, if the preparer can find other past deductions they're entitled to.

Robertson told of one couple who didn't know they were eligible for an education deduction. When they amended a return from two years earlier, the government cut them a check for $2,500.

"It made a significant difference," Robertson said. "I think they've actually bought a house now with a little bit of the money they saved."