Americans Leave $4 Billion on the Table

The IRS is touting the fact that Americans have left $4 billion unclaimed as part of last year's phone tax refund. The details:

Taxpayers collected only about half the $8 billion the IRS expected to pay them in its phone tax refund, the most far-reaching refund in the agency's history.

Money magazine's report on the issue cites two main reasons for people not claiming their money:

• Many taxpayers, following the advice of the IRS, didn't want to bother searching for old phone bills to calculate exactly how much they were owed, and took the standard $30 to $60 refund instead, refunds that were based on the number of exemptions claimed.

• Despite what the report said were generally good efforts by the IRS to communicate the program to taxpayers, many remained uninformed. As of June 9, about 87.6 million, or 71.5 percent, of the 122.6 million individual income tax returns filed had made a phone tax refund claim.

I look at each of these explanations in different ways:

1. It's not worth it to get the exact amount. I took the standard refund. Was it worth me digging through years of phone records (like I had them anyway) to come up with a number that MAY have earned me a bit more? Probably not. We're looking at hours to get and look through the records, and since we've never talked a lot on the phone, we probably wouldn't be due much anyway.

2. Being uninformed -- consider this another tax on ignorance. BTW, if these people would have used a CPA to do their taxes, they probably wouldn't have missed this one.

Comments

[Kevin]

As a CPA, I strongly agree with #1. I only had one person who went back and claimed the actual credit and it wasn't much more than the standard. Not to mention the fees to pay your tax preparer to figure the actual amount could end up exceeding the difference in the credit. Our tax software automatically put the standard amount in based on exemptions, I assume most did this as well, so the people not claiming it probably filed manually. This is just about the easiest $30 you can ever make. I even filed a few returns that normally were non-filers just to get this credit.

[Brandon Barkley]

Of course if they used a CPA it would have cost more than the $30-60 refund quite possibly! :)

[Chris]

I think just about all of the problem is #1. I would never have spent the time it would have taken to collect all that paperwork for a measly $5. The IRS probably doesn't understand this, because they would spend thousands of dollars on paperwork and manpower to go collect fifty bucks from someone.

They really just need to take that $4 billion and put it into social security or something. Really, just do a national poll, set up a voting website on whitehouse.gov and let everyone enter their social security number and vote yes or no, or put a checkbox on the 2007 tax return forms, "Want the excess phone tax to go into social security?". Even voting for simple things is so complicated now that its a headache to do it (there's a proposal in my local county I want to vote for, but the voting centers will only be open 4 days, in the middle of the workweek, in the middle of the workday - idiots!).

Unfortunately, they will probably spend more than $4 billion in their effort to refund it to us.

[Phil]

I'm one of the 71% that actually dug out my records and got the credit. I just pulled them out of my filing cabinet and added up the numbers; it took about 1/2 an hour. That half hour of work got me $90 for the phone tax refund. Getting $90 instead of the default $30 was well worth that half hour of work in my opinion.

[Me]

I am organized enough that I did actually dig through my paperwork for the phone tax. The standard deduction was higher. I also use a CPA for my taxes. The check I write to him every year is well worth the money. I visited with three before I chose him. He doesn't charge me for quick phone calls and visits.

[Nicole]

I also went through my records and figured out my actual deduction. I can't remember now what it was, but it was probably around $80 or $90. Yes it took a bit of time, but I probably just would have spent that time watching crappy tv anyway. I do my own taxes using Taxactonline so I didn't have to pay anyone else to do the calculations.

[kitty]

I agree with number 1 too. In my case, I simply didn't have all the old bills. Obviously, had I known I'd need them I'd have kept them. Had I had them I'd probably go back and calculate. Ironically, I had only gotten rid of them a few months earlier - file was getting way too thick...

I'd imagine a lot of people simply didn't have the old phone bills.

[Linda]

American unclaimed money! There is much of it, and what is really interesting is when you find the same names on the list several times. Many don't know they have money just sitting there unclaimed.

Before you pay to search your name you may want to look in your government listings. In NY State the list is controlled by the New York State Comptrollers Office.