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Tax Refund Vs Internal Revenue Service

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The term refund refers to the request to the IRS by the taxpayer for the return of excessive income taxes paid. According to data released by the IRS on March 2, 2005, the dollar amount of refunds sent to taxpayers is surprisingly strong in comparison to last year. Total refunds through February 25 were $93.3 billion, up $6.5 billion (7.5%) over the same period last year. Strong refund payments in the last three years are related to both the weak economy and three successive rounds of tax law changes which have both contributed to the temporary boost of refunds. Currently, over $2 billion is sitting in the Internal Revenue Service account unclaimed by rightful owners.

The money is owed to 1.7 million taxpayers who never filed 2001 …show more content…

If no tax return was filed with the IRS, the claim may be made within 2 years from the date that the tax was paid to the IRS. Under section 6511(d)(1) a taxpayer may file a claim within 7 years if the tax refund relates to a bad debt under section 166 or 832(c) or in connection with a loss from a worthless security under section 165(g).
If the taxpayer took an itemized deduction for state or local taxes on the Federal income tax return for 2003 or a prior year, and received a refund of those taxes in 2004, he may have to include all or part of the refund in his income on his 2004 tax return. Form 1099-G provides assistance in helping determine the refund amount. The worksheet in the instructions for From 1040 can also be used to determine the taxable portion one's refund. However, if any of the exceptions listed in the instructions applies, the taxpayer should refer to Publication 525. It contains further information on how to compute the taxable portion of the refund, and includes special worksheets.
If the taxpayer did not itemize deductions on the tax return for the year to which the refund applies, then it is not necessary to report any of the refund as income. However, any interest received on that refund must be reported as interest income in the year received. Check the status of your income tax refund within 72 hours of filing electronically by clicking "Where's My Refund?" on the

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