Can the IRS Owe You Money if You Never Filed a Tax Return?

If you’ve never filed a tax return, you might be expecting the IRS to come after you. Failing to file your tax return is a bad thing, but it might not be for the reasons you’re expecting. You might have already let the IRS keep too much of your money.

This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.

How can the IRS owe you money if you never filed a tax return?

For most people, you don’t actually pay taxes when you file your tax return. You pay taxes throughout the year, then your tax return is just to check that you paid the right amount.

If you do your taxes wrong, you might get a CP12 notice. If you don’t do your taxes at all, you might lose your tax refund.

What do you mean you pay taxes throughout the year?

If you’re an employee, your employer automatically takes your taxes out of your paycheck and sends them to the IRS.A good chunk of that tax withholding goes to your federal income taxes. That’s why when you file your federal income tax return, you should have already paid most, if not all, of your federal income tax bill.

Why would the IRS owe you money?

Income tax withholding is just an estimate. When you got hired, you should have filled out a W-4 with your other paperwork to tell your employer how much to withhold.

However, variations in your pay and your life situation means your tax withholding rarely matches your tax bill to the exact cent.

It’s possible you could pay too much in withholding during the year, and you’re entitled to get that money back.

You may also have gotten a refundable tax credit such as the Earned Income Tax Credit, Child Tax Credit, or American Opportunity Tax Credit.

How do you get your money back from the IRS?

You get your money back from the IRS by filing an income tax return.

When your return shows that you paid too much in taxes during the year, the IRS will send you a refund.

You can get a check mailed to you, set up a direct deposit, apply the refund towards next year’s taxes, or use it to buy savings bonds.

How long do you have to get a tax refund?

Ideally, you want to file your tax return on time. That means filing your tax return for the prior calendar year by April 15th each year.

If you don’t file on time, you have up to three years to file and request a refund. If you don’t file for your refund by the deadline, the IRS gets to keep your money.

Conclusion

If you never filed a tax return, the IRS may still owe you money. Even if you’ve never paid the IRS, your employer may have withheld taxes from your paycheck that you didn’t actually owe.

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