Client Story-$45,000 LOST!

Lost Refunds

A married couple contacts me and would like to discuss their tax situation because while they KNOW they are due refunds; yet the IRS is claiming they owe.  You see, the client knew that they had plenty of withholding in years past, but they simply chose not to file their tax returns. At some point the IRS gets tired of waiting for these returns and contacts the couple.

So, in 2018 the couple puts together eight years of tax returns and files for 2010 to 2017.  The returns for years 2010 through 2014, the returns had refunds worth a total of $45,000.

Then things shifted.  The returns for 2015-2017, each had an amount due.  These years totaled $30,000 of taxes owed. The couple was expecting a nice refund of $15,000 because of their tax filling efforts.

This was not to be.

The IRS denied the carry-forward of refunds for tax years 2010-2014 and demanded the tax owed for 2015-2017, $30,000 plus penalties and interest!

Sadly, in this situation the IRS was correct: Overpayments of tax can only be claimed for three years, either as a refund OR applied to another tax year.  By the time this couple filed the 2010-2014 tax returns in 2018 any claim to the refunds had expired.

Dragging their feet, NOT filing their tax returns timely cost this couple $45,000 and left them in the very uncomfortable position of owing the IRS over $30,000.

Bottomline: If you are owed a refund, you only three years to file a return and claim it. After three years the refund is gone. If you miss this window you will basically make a donation to the government!

If you are a few years behind on tax filings, call me today!  We will work together to get you back on track.

Jeff Roltgen, Tax Rescue CPA

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