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Still Time to Claim Your 2007 Refund

Usually the IRS hunts down those who owe. Now, the agency is looking for people to pay.

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The IRS recently announced that refunds totaling more than $1.1 billion could be distributed to almost 1.1 million people who didn’t file a federal income tax return for 2007. The agency estimates that half of these potential refunds could be $640 or more.

The only “catch” – you’ll have to file that old return. Tardy filers have until this year’s deadline (returns must be postmarked by April 18, 2011). By law, taxpayers have a three-year window to file a return to claim their refund. After that, Uncle Sam gets unclaimed refunds.

No matter the size of an expected refund, though, you’ll get squat if you failed to file for 2008 and 2009. And the IRS will deduct whatever’s still owed to the government—be it unpaid child support or past-due student loans—from the amount of the refund. Still, there’s no penalty for filing late if you qualify for a refund. The problem? You’ll miss out on collecting that refund if you don’t file within the three-year window, says the IRS.

The agency posits a few reasons why certain taxpayers didn’t  file. Some people may not have met the income minimum for filing, even though taxes were withheld from their wages. What’s more, a number of low- and moderate-income workers may not have claimed the Earned Income Tax Credit. (Congress originally approved the EITC, a refundable federal income credit, in 1975 to help offset Social Security taxes and to provide an incentive to work.) If EITC exceeds the amount of taxes owed, qualifying taxpayers will get a refund. Still others may not have filed if they made quarterly estimations, mistakenly thinking they were “even with the government,” says I. Jay Safier, CPA and principal at Rosen Seymour Shapss Martin & Company LLP. Some taxpayers–partners in a partnership, the self-employed, and others who don’t have earned income–must remit tax estimates each quarter in lieu of withholdings. They’re not exempt from filing a return.

Readers, do you think three years is a fair grace period to file late returns and claim your refund?





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About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (, retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at