The IRS reported that more than $1 billion in 2021 tax refunds remain unclaimed. Approximately one million taxpayers could lose these funds if they do not file their returns before April 15, 2025, the deadline to request refunds for that fiscal year.
Under federal rules, taxpayers have a maximum of three years from the original filing date to claim refunds. After this period, the money is transferred to the government. For 2021, the period ends on April 15. Those who don’t file will lose an average of $780, according to IRS calculations.
Hurry up: you’re gonna lose your 2021 tax refund if you don’t act SOON
“If you did not file a tax return in 2021, time is running out to claim any refund you may be entitled to,” the agency said in a blog. Those who owe taxes face penalties, but those awaiting refunds are not typically investigated for delays.
Retrieving old tax documents, such as W-2 or 1099 forms, is essential for late filers. The IRS allows access to income records and transcripts through an IRS.gov account, although ordering physical copies could take weeks. The agency recommends exhausting digital options first.
Can I use an online tax preparer?
Most tax preparation software does not support prior year returns online. Taxpayers must purchase 2021 desktop versions, complete the forms, and print them to mail. This process requires additional time, especially if data from previous employers is needed.
In addition to the refunds, some taxpayers could claim the Recovery Rebate Credit, linked to the 2021 stimulus checks. Single people can receive up to $1,400 for a single person, and up to $2,800 for couples. Eligible dependents increase the amount, with families of four reaching up to $5,600.
The credit applies even if beneficiaries did not receive the original stimulus. However, it must be claimed on the 2021 return. Those who skip this step will lose both the refund and the credit, the IRS warns.
Tax preparation options available for the 2024-2025 tax season
H&R Block, Liberty Tax and Jackson Hewitt offer in-person and online services for past returns. TaxAct stands out for its affordable software, while the IRS Free File program helps low-income taxpayers with free paperwork. No digital platform allows you to submit late returns electronically.
“You would need to purchase and download the company’s 2021 desktop edition, then print and mail the completed return,” the IRS explains. Some companies provide advice on recovering lost documents, but waiting times vary depending on the complexity of the case.
The IRS encourages taxpayers to start the process early. Verifying updated mailing addresses, reviewing bank statements, and confirming data with previous employers prevents errors. Those facing document delays can request extensions, but these do not postpone the April 15, 2025 deadline.
