The Internal Revenue Service (IRS) has been enjoying an interest free loan of $1.1 billion courtesy of the 1.1 million United States taxpayers who failed to file their 2007 income tax returns. In a recent press release, the IRS reminded Americans who failed to file their 2007 tax returns that they have just a few more weeks, until April 18, 2011, to file their 2007 income tax returns (Form 1040), or that loan to the IRS turns into a gift.
That's right; if you forgot to file your 2007 income tax return or were not required to file it, any money that the IRS owes you will revert to the Department of the Treasury after April 18, 2011. Great for the government's efforts to close the budget deficit, but not so great for increasing your own personal wealth.
The IRS estimates that approximately half of taxpayers owed a potential refund are due one for more than $640. The IRS has also released a table of average refunds by state. Approximately 31,000 taxpayers in New Jersey are owed median tax refunds of $705, with a maximum refund of $36,504 while 3,900 taxpayers in New Hampshire are estimated to be due a refund of $741 with a top amount of $4,960. One lucky late filer in California could be receiving as much as $129,205 back if their 2007 income tax return is postmarked by April 18.
Afraid that sending in your 2007 return now, so long after it was due back in 2008, will trigger some sort of penalty? The good news is that returns that qualify for a refund are not hit with a late filing penalty. Remember, though, that the IRS will hold onto your check if you have also failed to file your 2008 and 2009 tax returns or if you have additional outstanding amounts due to the IRS. If you have past due student loans or other forms of federal debt, or if you are behind on your child support payments, then your refund may be applied to those debts instead of being sent to you.
Even if you did not meet the minimum income levels to be required to file a 2007 income tax return, you still may be owed a hefty refund from the IRS. If you had an employer withholding income taxes on your behalf during 2007, then you may be able to get some of those funds back. Lower income individuals and families also may not have claimed their Earned Income Tax Credit, which provided money back to families earning up to $39,783 during 2007, regardless of whether they owed any income tax at the end of the year.
Not sure where your 2007 Form W-2 is or if you have all of your Forms 1099? Get copies of them from the employer or bank in question or get a free transcript showing that information from the IRS. Use the IRS's online system or call 1-800-908-9946 to get started.
Now the only question you should have is what you will do with your extra cash!
Shayna Leah offers an up close look at current issues facing taxpayers. An experienced tax accountant, she uses her familiarity with current tax issues and trends to break down the hottest issues and stories.
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