Every single year, over 600,000 people are incarcerated in the US. Many of them are released every year as well. But, fitting into society is never easy. A felony conviction causes loss of work and relations. Finding work and home can especially be difficult to find. It is in addition to the loss of other civil rights.
It makes you wonder, do they also lose the right to receive tax refunds?
Some of the many losses that come with a conviction are:
1 The right to bear arms
2 Right to vote or to hold public office.
3 The right to travel abroad.
4 Parental rights.
5 Discrimination in employment.
The loss of these rights and discrimination in employment can make felons go back to crime. But for today, we shall discuss the issue of the tax refund to felons.
What Is a Tax Refund?
It is a reimbursement to taxpayers of the excess amount that has been paid to the federal government. A tax refund means you overpaid the federal government in taxes. It is not a bonus or gift from the government.
Sometimes tax refunds are unavoidable. These are the reasons you might receive a substantial refund in your taxes.
- When you make an error while filling the IRS Form W-4, the form is used to estimate withholding tax amounts from your paycheck.
- If and when you forget to include the changes that affect the amount of tax to be deducted.
- You purposely fill the Form W-4 for an excess amount to get a high refund.
- If you are self-employed or a freelancer because you have to file quarterly tax estimates. You may overpay to avoid underpaying hence the difficult task of verifying deductible expenses.
Do Felons Pay Taxes?
Before we get to whether a felon gets a tax refund, the first question is if a felon is eligible to pay tax. Many felons find difficulty in finding employment. While that is not the only loss they suffer, it is a major loss. Without work, many felons cannot afford many things, including paying taxes.
Legally, these five groups are the only ones exempted from paying taxes.
1 Citizens working abroad- Those living and working overseas are exempt from paying taxes.
2 Nonprofit organizations include universities, religious institutions, hospitals, humanitarian organizations, and all groups that improve society.
3 Very low-income earners. When your income is not more than the standard deduction, you don’t need to file or pay taxes.
4 Taxpayers with numerous deductions. If you have other deductions like a medical bill, you can claim this Schedule A as an un-refunded medical expense.
5 A taxpayer with many dependents. If you have many children, you may not be eligible to pay taxes because you can claim a child tax credit.
For the rest of the taxpayers, whether a felon or otherwise, paying taxes is a civic duty. All citizens must pay taxes. But you may ask, what happens to the money earned by felons in prison?
First, a felon does not earn enough money to qualify for filing in prison. This means that they were ineligible to pay taxes and to file returns. Therefore, they have no tax refund to receive.
Do Felons Receive a Tax refund?
Sometimes a felon may not receive their tax refund even when they are eligible to. This is called restitution. Any amount a felon owes to the government in restitution is automatically paid from the tax refund. IRS has the legal right to take hold of the money in a tax refund to pay for the restitution amount.
The IRS flags a felon owing any amount in restitution. That is the reason you may not receive a refund even when it is due. When you clear the amount, you will be cleared to receive tax refunds. The judge normally sets the amount during sentencing.
Statistics collected in 2016 show that $100 billion was owed by felons in restitution. And the percentage of those who pay is only 5%, while 95% received waivers for lack of the ability to pay. With such rates and amounts, you can agree that the deferral government is justified in withholding the tax refunds for felons.
Unclaimed Tax Refunds
Have you cleared with IRS on your restitution and still not receiving your tax refund check? Each year the IRS remains with millions of dollars’ worth of unclaimed or undelivered tax refund checks. This could be the reason why.
- The main reason is when people move without updating their address. The checks are always mailed to the last known address. When the check is not delivered to you, it is returned unclaimed to the IRS.
- Change of bank account number for those who receive direct deposits.
- Lost mail. There are times that the mail is lost or erroneously delivered to the wrong address.
If you don’t receive your check, go to the IRS website, and the page indicated Where’s my Refund. You will need your Social Security Number (SSN), the amount you expect in the refund, and your filing status. You will get a prompt to change your address.
Another option is to contact the IRS via phone and speak to a representative who will help you change your address. After changing the address, always notify the USPS.
The definite answer on whether felons get tax refunds is a definite yes. But the circumstances differ. A felon owing restitution will not receive a refund until all the debt with the government is cleared. Filing taxes is the duty of every citizen.
The government entices employers to offer work to felons in return for exemption of tax. It gives felons a second chance at life in society. After you receive your tax refund, use it wisely. After all, it is your money. Treat it like a saving and not a gift. Clearing debts or saving them for emergencies is not a bad idea. If it is enough to invest, go ahead. It may come in handy when you are hard-pressed for cash.
If you have any financial goals, use the money on them. The bottom line is you are eligible for tax refunds only if you don’t owe restitution to the federal government.