How Long Can an Applied Refund Be Left With the IRS?

Waiting too long to claim your refund can mean you forfeit the money.

Waiting too long to claim your refund can mean you forfeit the money.

If the Internal Revenue Service owes you a refund, you might procrastinate on filing your taxes because you know you won't have to face late payment penalties. But the IRS won't hold your refund forever, and it may use your refund to pay outstanding tax debts if you don't file your taxes.

Basic Rules for Tax Refunds

Every year the IRS establishes income thresholds at which taxpayers don't have to pay taxes, and this can make you eligible for an automatic refund of payroll taxes. For example, for the 2012 tax year, single taxpayers under the age of 65 didn't have to file taxes if they made less than $9,750 that year. If you know you're going to get a tax refund, you won't pay penalties if you file your taxes late. However, if you owe state taxes, you could still be hit with a penalty for filing your taxes late.

How Long Do I Have?

You have up to three years to file taxes and claim your refund from the IRS. The clock starts ticking on the day your tax returns are due. If you don't file your taxes within this window, you'll forfeit your refund and all funds will go to the U.S. Treasury.

Refunds, Loans and Outstanding Debt

Failing to claim your refund can be a risky strategy if you end up owing money in subsequent years. The IRS applies your refund to any student loans in default and may withhold your refund if you owe unpaid child support or alimony. Likewise, if you end up owing taxes in the following tax year, your refund could be applied to your tax balance, so it's a good idea to get your refund as soon as possible.

Paying State Taxes

Even if you don't owe any federal taxes, you might still owe money to your state or city, and these taxes are calculated with your federal tax returns. If you owe local taxes but don't pay them, your refund might be forfeited and used to pay your outstanding state or local tax debt instead.


About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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