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Deadline looms for unclaimed billions in federal refunds

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Unclaimed income tax refunds worth more than $1.5 billion await an estimated 1.4 million individual taxpayers who didn’t file a 2016 federal income tax return. The problem: They have only until July 15 to claim the money.

The IRS estimates the midpoint for the potential refunds is $861, or about a third of the average federal refund for 2016.

The three-year window to claim these refunds closes on this year’s Tax Day, by which time claimants must file a 2016 return.

To answer affected clients’ likely question, there’s no penalty for filing late when a refund is involved.

Taxpayers who are due a 2016 refund are also reminded that their checks may be held if they haven’t filed returns for 2017 and 2018. In addition, the refund will be applied to any amounts owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.

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