IRS Issues Urgent Warning over $1.2 Billion in Unclaimed Refunds: Don’t Miss the April 15 Deadline

Time is officially running out for over one million Americans to claim their share of $1.2 billion in unclaimed tax refunds from the 2022 tax year. According to the Internal Revenue Service (IRS), over 1.3 million people nationwide may still be owed refunds for 2022, and the deadline to file and claim that money is April 15, 2026.

The IRS estimates the median potential refund is $686, a figure that doesn’t include additional credits that may apply. Under federal law, taxpayers generally have three years to file and claim a refund. Should that deadline pass, the money becomes the property of the U.S. Treasury, and taxpayers typically lose their right to the funds permanently.

At Demian & Company, LLC, we help New Jersey individuals and businesses resolve filing problems, prepare tax returns, and address IRS matters to ensure missed deadlines don’t become permanent losses.

Why the 2022 Tax Refund Window Is Closing

The IRS estimates that over 1.3 million individuals nationwide have yet to file a federal tax return for 2022. While many people choose not to file because they earned below the filing threshold, they often overlook the fact that federal taxes may still have been withheld from their paychecks or that they may qualify for refundable credits. The IRS also emphasizes that its $686 median refund estimate doesn’t include any applicable credits.

The Three-Year Rule (IRC §6511)

Under Internal Revenue Code §6511(a), a claim for credit or refund of an overpayment of any tax must be filed by the taxpayer within three years from the time the return was filed or two years from the time the tax was paid, whichever is later. This means that those who didn’t file a 2022 return are approaching the 2026 filing deadline.

The Median Payout and the Earned Income Tax Credit (EITC)

The IRS estimates the median unclaimed refund for 2022 is $686, but for many taxpayers, the amount could be higher because that estimate doesn’t include additional credits.

• Low-to-moderate income workers: Many individuals may qualify for the Earned Income Tax Credit (EITC), which for tax year 2022 was worth up to $6,935 for taxpayers with qualifying children. The IRS says the 2022 income thresholds went up to $53,057 for single filers with three or more qualifying children, or $59,187 for married filing jointly.
• Students and part-time employees: Even if you only worked a few months in 2022, you may still have had federal income tax withheld that could be refundable if a return was never filed.

What Happens If You Miss the April 15 Deadline?

If you don’t submit your 2022 return by April 15, 2026, the consequences are usually final. Once the refund window closes, taxpayers generally lose the ability to claim that 2022 refund.

1. Forfeiture of funds: The money generally becomes the property of the U.S. Treasury.
2. Loss of refund-related credits: You can no longer recover credits tied to that unfiled 2022 return, including the Earned Income Tax Credit, if you were otherwise eligible.
3. Potential holds and offsets: The IRS may hold a 2022 refund if 2023 and 2024 returns haven’t been filed. The agency also says a 2022 refund may be applied to amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or other past-due federal debts, such as student loan debts.

Recovering Missing Documents from 2022

The loss of records is a common reason New Jersey residents fail to file. If you no longer have your W-2s or 1099s from three years ago, you aren’t out of options. The IRS specifically says taxpayers missing Forms W-2, 1098, 1099, or 5498 should first request copies from their employer, bank, or other payers.

• Employer requests: Start by asking your employer for copies of missing W-2s or other wage records. According to the IRS, employers are one of the first places taxpayers should go when key forms are missing.
• Bank records: If you are missing Forms 1099-INT, 1099-DIV, or similar income statements, the IRS says taxpayers should also request copies from their bank or other payers.
• IRS transcripts: You can request a wage and income transcript from the IRS using Get Transcript Online or Form 4506-T. The IRS notes that Form 4506-T requests can take several weeks, so it’s important to plan.

The IRS also states that current and prior-year forms, including 2022 Forms 1040 and 1040-SR and their instructions, are available on IRS.gov or by calling 800-TAX-FORM.

New Jersey State Tax Implications

Filing your federal return is only half the battle. New Jersey residents who fail to file federal returns may also miss their NJ return for the same year. This matters locally as well: the IRS estimates that about 33,400 New Jersey taxpayers may still be owed 2022 federal refunds, with a median potential refund of $746 and more than $30.8 million in total unclaimed refunds statewide.

New Jersey refund rules should be reviewed separately. The New Jersey Division of Taxation says that, to claim a refund on an amended return, the amended return must generally be filed within three years from the original due date of the return or two years from the time the tax was paid, whichever is later. That’s why it’s important to review both federal and state exposure together rather than treating the federal return as a standalone filing.

Proactive Steps to Take Before April 15

Follow the below steps to ensure your 2022 return is processed correctly and your refund is issued:

1. Check your filing history: Review your records and filing history carefully to confirm whether your 2022 return was actually filed and accepted.
2. Reconcile all income: Make sure you have records for all 2022 income sources, including W-2 wages, 1099 income, and any gig work or side income.
3. Address 2023 and 2024 filings: The IRS says your 2022 refund may be held if you are not up to date on your 2023 and 2024 returns.
4. Professional review: A CPA can help identify missing records, open tax years, possible offsets, and credits you may still be entitled to claim.

Secure Your Refund with Demian & Company, LLC

Navigating the "use it or lose it" rules of the IRS requires precision and speed. With $1.2 billion on the line, why not take action immediately? Our team at Demian & Company, LLC is ready to help New Jersey residents and business owners reconcile their 2022 accounts and claim their maximum legal refund. Contact us today to discuss your options.