Forbes - Unclaimed Tax Refunds Exceed $1 Billion: Are You Missing Out on Money?
The host, Kelly Philips Serb, covers several key topics in the tax and budget space. Congress has voted to avoid a government shutdown, with a spending bill costing $1.6 trillion, including increased military spending and cuts to non-defense spending and IRS funding. The IRS is undergoing significant staffing changes, with high-profile departures and potential workforce cuts. Tax filing season shows low engagement, and the Treasury is increasing financial scrutiny in certain areas. The IRS has over $1 billion in unclaimed tax refunds from 2021, urging taxpayers to file returns to claim their money. The video also explains the implications of IRS transcript codes, particularly TC 570, which indicates a delay in processing returns. Additionally, it discusses the potential for investing in gold through IRAs, highlighting the need for compliance with specific IRS rules.
Key Points:
- Congress passed a $1.6 trillion spending bill, increasing military spending and cutting IRS funding.
- IRS faces staffing changes and potential workforce cuts, impacting tax processing.
- Over $1 billion in unclaimed tax refunds from 2021; taxpayers urged to file returns.
- IRS transcript code TC 570 indicates processing delays, not necessarily an audit.
- Investing in gold through IRAs is possible but requires compliance with IRS rules.
Details:
1. 🎙️ Welcome to Tax Breaks Podcast
1.1. IRS Shakeups and Financial Scrutiny
1.2. Understanding Tax Transcripts
1.3. IRA Investment Strategies
1.4. Tax Trivia
2. 🗳️ Congress Averts Government Shutdown
- The House of Representatives voted to fund the government through September 30th, 2025, with the final vote tally at 20,117 to 2,113, indicating strong bipartisan support.
- The Congressional Budget Office (CBO) estimates the spending bill will cost $1.6 trillion, including $893 billion for defense and $78 billion for non-defense spending, showing a prioritization of defense spending.
- The resolution increases military spending by $6 billion, demonstrating a strategic emphasis on national security, while cutting $13 billion in non-defense spending, highlighting fiscal restraint.
- The bill includes a boost in Immigration and Customs Enforcement (ICE) deportation operations, reflecting a policy focus on immigration enforcement.
- It claws back $20.2 billion of IRS funding, impacting the agency's operations significantly, particularly in workforce reductions between 20% and 50%.
- A U.S. District Judge in California ordered the reinstatement of approximately 7,000 probationary IRS employees who were unlawfully terminated, countering part of the budget cuts.
- IRS budget cuts are expected to continue, with potential workforce reductions, affecting service delivery and operational capacity.
- Tax filing and processing numbers remain low, indicating taxpayer reluctance during the current tax season, possibly due to uncertainties in IRS operations.
- The Trump Administration will expand financial transaction reporting requirements for certain areas in California and Texas, aiming to enhance financial transparency and oversight.
3. 🧾 Decoding IRS Transcript Codes
- IRS transcript code TC 570 indicates a processing delay due to additional account actions pending, often without taxpayer wrongdoing.
- Common triggers include suspected fraud, discrepancies in credits claimed, or income reported, prompting IRS review or requests for more information.
- In cases of suspected identity theft, the IRS may issue a letter 5071C for identity verification.
- Resolution is marked by code TC 571 (issue resolved) and TC 846 (refund issued).
- Taxpayers should use the 'Where's My Refund' tool on irs.gov for status updates, which are more timely than transcript tools, updating 24 hours post e-filing or four weeks post paper filing.
4. 💸 Alert on Unclaimed Tax Refunds
- More than $1 billion in tax refunds from the 2021 tax year remain unclaimed by over 1.1 million taxpayers.
- To claim a tax refund, taxpayers must file a federal income tax return within three years; otherwise, the refund becomes property of the US Treasury.
- The deadline for filing a 2021 tax return to claim a refund is April 15, 2025.
- Taxpayers in states such as New York, Pennsylvania, Rhode Island, Massachusetts, and Illinois have the highest median potential refunds.
- California, Idaho, New Jersey, Minnesota, and Montana have the lowest potential refunds.
- More than 100,000 taxpayers in California and Texas are potentially missing out on refunds, followed by New York, Florida, and Pennsylvania.
- Thousands of taxpayers in less populated states like Wyoming, North Dakota, Vermont, South Dakota, and the District of Columbia also have unclaimed refunds.
5. 📊 Engaging Tax Trivia
- The IRS expects to receive over 140 million individual tax returns for the 2024 tax year by the April 15 deadline.
- In the first year of the modern federal income tax system, 1914, the IRS received approximately 350,000 tax returns.
- By 1945, the IRS was processing 50 million individual tax returns annually.
- In 2024, the IRS had received 139,137,000 individual income tax returns by tax day.
6. 🏦 Gold Investment in Retirement Accounts
6.1. Tax Code and Storage Requirements for Gold in IRAs
6.2. Investment Options and Considerations for Gold in IRAs
7. 📅 Key Tax and Accounting Updates
- Retirees who turn 73 in 2024 must begin receiving their Required Minimum Distributions (RMDs) from IRAs, 401(k)s, and other retirement plans by April 1, 2025. This rule applies to those born after December 31, 1950, ensuring they comply with the IRS regulations.
- Following the initial RMD, all subsequent RMDs are due by December 31 each year, with a specific note for those taking their first RMD for 2024 in 2025, who must also take a second RMD for 2025 by December 31, 2025. This ensures compliance with IRS scheduling requirements and avoids penalties.
- Business executives' optimism regarding the US economy has fallen sharply from 67% last quarter to 47% this quarter, based on data from the Economic Outlook Survey by the American Institute of CPAs and the Chartered Institute of Management Accountants. This decline is largely due to mounting concerns over inflation and tariffs, which are impacting economic forecasts.
- The survey results emphasize caution for financial planning and strategy, especially for CFOs and other financial leaders, as these economic concerns could influence budgeting and resource allocation decisions.