Millions of dollars in potential tax refunds are going unclaimed across the United States, with some states seeing significantly more unclaimed money per resident than others, a new analysis of IRS data finds.
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An analysis by tax preparation software provider Sigma Tax Pro found that the amount of potential unclaimed refunds varied widely across the country when adjusted for population.
The analysis examined five years of IRS data covering tax years 2018 through 2022, calculating the value of potential unclaimed refunds per 100,000 residents.
The analysis ended with 2022 because it is the latest tax year for which the three-year window to claim a refund has closed and unclaimed refunds have been reported by the IRS.
Alaska had most unclaimed taxes per 100,000 residents
By the numbers:
According to the analysis, Alaska had the highest value of potential unclaimed tax refunds per 100,000 residents across the five-year period, at $506,098.
In 2022, the state had an estimated $3.75 million in potential refunds left unclaimed, with a median potential refund of $721.
A tax payer rebate check sits on a table July 25, 2001 in New York City (Credit: Spencer Platt/Getty Images)
Alaska’s position was consistent throughout the five-year period, ranking first for the highest value of potential unclaimed tax refunds per 100,000 residents in each year analyzed.
When adjusted for population, an estimated 554 taxpayers per 100,000 Alaska residents were owed a potential refund.
Alaska was followed by Washington, Delaware, Hawaii and Nevada.
Wisconsin had lowest value of unclaimed refunds
The other side:
Meanwhile, at the other end of the rankings, Wisconsin had the lowest value of potential unclaimed refunds per 100,000 residents.
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An estimated $14.87 million in potential refunds went unclaimed in Wisconsin in 2022, with a median potential refund of $658. Adjusted for population, that amounted to $249,479 in potential unclaimed refunds and 295 taxpayers per 100,000 residents.
South Carolina ranked next at $259,287 per 100,000 residents, followed by Utah at $271,417.
States that saw the biggest ranking changes
Dig deeper:
The five-year data also showed significant changes in how some states ranked.
Montana recorded the biggest climb, rising 17 places from 40th in 2018 to 23rd in 2022.
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Arizona followed, moving up 15 places, from 26th to 11th, while Mississippi climbed 11 positions, from 41st to 30th.
Colorado experienced the biggest fall, dropping 22 places from 13th in 2018 to 35th in 2022.
What they’re saying:
“There are many reasons why tax refunds may go unclaimed, from a lack of understanding of the tax system to concerns that interacting with the IRS could result in an audit or an unexpected tax bill.” Ian Gardner, the director at Sigma Tax Pro, said in a statement. “But the data shows just how much money could potentially be going unclaimed. With median potential refunds worth hundreds of dollars, this could be meaningful money for the people who are owed it.”
He added, “Rather than leaving money unclaimed, it’s always worth speaking to a tax professional to understand whether you could be owed a refund and the best way to claim it.”
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