The IRS is alerting Americans about an impending deadline that could cost them billions in tax refunds if they do not act swiftly.
Residents of a key state are racing against time to claim their $946 tax refund for the 2021 tax year.
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Approximately 1.1 million taxpayers are still due refunds for the tax year 2021, but must file their returns to the IRS by April 15, as indicated by the agency in early March.
Many individuals have not yet submitted their Form 1040, or Federal Income Tax Return, for 2021, resulting in over $1 billion in refunds that remain unclaimed, according to IRS estimates.
Rhode Island has about $3.5 million of the IRS funds, with around 3,600 residents yet to claim the state’s median potential refund of $946.
This implies that half of the refunds are greater than $946, while the other half are less.
California and Michigan also have significant amounts of unclaimed funds.
For instance, California residents have approximately $92 million in refunds from the 2021 tax year that remain unclaimed, while Michigan has over $37 million available.
Nationwide, the IRS estimates that as of March 11, there is $1,025,336,800 still unclaimed, with a median refund amount of $781 for 2021.
The actual refund amount received by Americans will depend on their individual tax circumstances.
Generally, taxpayers must file to claim their tax refunds within three years of the filing deadline, which means they have until Tax Day on April 15 to submit their 2021 tax returns and recover the funds owed to them.
If Americans miss the deadline next Tuesday, the funds will revert to the US Treasury.
Taxpayers seeking to claim their 2021 tax refunds may find that their funds are withheld if they have not yet filed their 2022 and 2023 tax returns, as noted by the IRS.
The agency also reminds taxpayers that refunds from 2021 will first be directed towards any amounts owed to the IRS or a state tax agency.
These funds may also be used to settle unpaid child support or other overdue federal obligations like student loans.
BANK ACCOUNT BOOST
The Recovery Rebate Credit is a refundable credit for taxpayers who did not receive one or more of the stimulus checks during the pandemic.
More on stimulus checks
STIMULUS checks have been deposited into the bank accounts of Americans since the onset of the coronavirus crisis.
In late December, the IRS communicated its intention to distribute automatic payments totaling approximately $2.4 billion to individuals who did not claim the Recovery Rebate Credit on their 2021 tax returns.
Americans who neglected to claim any portion of the credit on their 2021 tax return received automatic payments in December and do not need to take action.
However, those who have yet to submit their 2021 tax returns can still qualify for a refund if they file and claim the Recovery Rebate Credit by Tax Day on April 15.
Another credit that individuals risk not receiving if they fail to file their 2021 tax returns is the Earned Income Tax Credit, or EITC, which could be worth up to $6,728 for taxpayers who have qualifying children.
This credit supports workers with low and moderate incomes and is available to individuals and families whose incomes fall below certain limits.
According to the IRS, the thresholds for 2021 were:
- $51,464 ($57,414 if married filing jointly) for individuals with three or more qualifying children
- $47,915 ($53,865 if married filing jointly) for those with two qualifying children
- $42,158 ($48,108 if married filing jointly) for individuals with one qualifying child, and
- $21,430 ($27,380 if married filing jointly) for those without qualifying children
This beneficial credit could provide up to $7,830 for eligible individuals this year, requiring them to meet only two conditions.
If you’re anxious about the April 15 deadline, the IRS has introduced a helpful “automatic extension” for tax returns and payments – check if you qualify.
2025 Tax Season
Tax season commenced on January 27, and individuals must ensure their filings are completed by April 15.
Failure to file by this date may lead to penalties.
Nevertheless, taxpayers who need additional time can apply for an extension, which extends the deadline to October 15.
To do this, one needs to complete Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This form can be submitted via mail, online through an IRS e-filing partner, or through a tax professional.
While there isn’t a specific timeline, the IRS indicates that refunds may be processed within 21 days of filing.
Be cautious of errors on any forms, as they can cause delays.
Taxpayers who file by mail may receive their returns within a month, although there may be delays as the IRS processes a large volume of returns.
As of January 31, the average refund was $1,928, according to the IRS.
This is a comparison to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even greater, reported by the IRS at $2,069.
To monitor your refund status, the IRS provides an online tool called Where’s My Refund? This tool is effective within 24 hours of e-filing and generally within four weeks for paper returns.
