IRS Holding $26 Million for Thousands of Jerseyans

More than 31,700 New Jersey residents could be missing out on millions of dollars in unclaimed tax refunds from 2021, with the deadline to claim these funds rapidly approaching. The Internal Revenue Service announced Tuesday that approximately $26.5 million in refunds await Garden State taxpayers who failed to file federal income tax returns for the 2021 tax year.

The median refund amount for these New Jersey residents is estimated at $657, though individual refunds could be significantly higher depending on personal circumstances and potential tax credits. According to Patch, these estimates don’t include the Recovery Rebate Credit or other applicable credits that could further increase refund amounts.

Deadline Approaching Fast

Under federal law, taxpayers typically have three years to file and claim their tax refunds. For the 2021 tax year, this means the deadline falls on April 15, 2025. After this date, any unclaimed funds will become property of the U.S. Treasury, permanently forfeiting the taxpayer’s right to these refunds.

“People should start now to make sure they have enough time to file before the April deadline for 2021 refunds,” an IRS spokesperson emphasized, noting that gathering necessary documentation and completing the filing process can take time, especially for returns from previous years.

New Jersey’s unclaimed refunds contribute to a national total exceeding $1 billion, spread across more than 1.1 million Americans who haven’t filed their 2021 returns. The IRS is making a concerted effort to notify potential recipients before the deadline passes.

Additional Credits Could Substantially Increase Refunds

For many taxpayers, particularly those with moderate to low incomes, the unclaimed amount could be substantially higher than the estimated median. “By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2021,” the IRS noted in its announcement.

The Earned Income Tax Credit (EITC) represents one of the most significant potential additions to refund amounts. For the 2021 tax year, this credit was worth up to $6,728 for eligible taxpayers with qualifying children. According to MyCentralJersey, the income thresholds for this credit in 2021 were quite generous, ranging up to $57,414 for married couples filing jointly with three or more qualifying children.

Even those without children could qualify if their income was below $21,430 ($27,380 for married couples filing jointly), making this credit accessible to a broad range of New Jersey residents who haven’t yet filed.

How to Retrieve Your Refund

For those who believe they may be entitled to a 2021 refund, the IRS has outlined several approaches to gather the necessary information to complete a return:

• Create or log in to an IRS Individual Online Account, which provides access to past tax transcripts, wage statements, and other essential documents
  
• Request copies of missing W-2s, 1098s, 1099s, or 5498s directly from employers, banks, or other payers
  
• Use the “Get Transcript by Mail” service on IRS.gov or call the automated phone transcript service at 800-908-9946
  
• File Form 4506-T to request a wage and income transcript, though this method can take several weeks

Current and prior year tax forms, including the 2021 Forms 1040 and 1040-SR, are available on the IRS.gov Forms and Instructions page or by calling 800-TAX-FORM (800-829-3676).

Potential Complications

The IRS cautions that taxpayers seeking 2021 refunds may find their money held if they haven’t filed returns for 2022 and 2023. Additionally, any refund amount will first be applied to outstanding debts owed to the IRS, state tax agencies, unpaid child support, or other federal debts such as delinquent student loans.

“This represents an opportunity for many New Jersey residents to receive money they’re legitimately owed, but they must take action before the deadline,” said a tax professional familiar with the process. “Even if someone isn’t sure whether they’re due a refund, it’s worth investigating, especially considering the potential for additional credits like the EITC.”

With the April deadline approaching, tax experts recommend starting the process as soon as possible, particularly for those who may need to gather documentation from multiple sources or who have more complex tax situations that might require professional assistance to maximize their refund amount.