You would have been given a refund had you filed your 2011 tax return, but you never did. The IRS is holding onto $1 billion in unclaimed funds that will become the property of the federal government if tax filers don’t claim the funds before the end of the tax filing period. Over 1 million houses failed to file and are owed the money.
Tax payers have three years to file a return and claim funds that they are owed. The people that do not normally file when owed tax refunds are part-time workers or students who do not make much money and therefore feel they will not be getting a refund. But they pay more into the system than is required and therefore would have gotten a refund had they filed.
The Earned Income Tax Credit (EITC) is one big area of refunds that are not filed. These are refundable tax credits and therefore are given to filers that have not paid much into the system but have earned some income. In 2011 the EITC was as high as $5,700 if your family size was large enough. There have been stories about illegal immigrants gaining the right to file 3 years of returns to obtain three years of EITC. Those numbers are not yet included in this report by the IRS.
As the Mega Millions jackpot grows to a record $540 million, those buying tickets are not the only ones with dreams about what a win could mean. State governments facing hard times understand a local winner would bring a bonus tax to the home state.
The taxes on the lump-sum payment option to any single winner would bring several million dollars of revenue to the state. That revenue in could restore the entire cuts being faced by social services programs, pay for several hundred low-income housing units and help to increase the number of state police.
The sale of ticket has grown to the point that the current jackpot is the highest in the history of the lottery in the US. A lump sum payment for a winner would bring that person almost $400 million if they are the only winner.
States like Rhode Island, with a 5.99 % tax rate would gain over $23 million with the win. Currently the state has a $7.9 million budget and is $22 million short.
Each state sets its own tax rate for the winnings on the lottery. In New York, citizens pay 8.82 percent, but in California and several other states there are no state taxes.
Ohio would also collect $23 million in taxes, a fraction of the $56 billion 2 year budget, while Montana would collect $50 million for an in-state win. The winnings could help with state buildings as well as infrastructure.
In February and March of this year, Rhode Island saw two Powerball wins, one of $336.4 million and the second of $ 60 million. These two wins have brought $17 million that may replace a $20 million bond.
While states cannot depend on lottery winnings, any state where the tickets are sold would be happy to collect the windfall.
Governor Chris Christie took his message to voters of New Jersey during a town hall meeting on January 18, 2012. He hit the airwaves in many media appearances. The first-term Republican governor of the Garden State attempted to sell his 10 percent income tax cuts for all. One day after his state of the state address, he informed crowds that he is the architect of New Jersey’s economic comeback.
With a boldness that only success can give, Christie presented the plan as a model for national economic policy too. Of course, this continues to feed into the speculation that he is positioning himself in a positive light for the 2016 presidential election. Political spectators also believe the tax cut is a way to firm up his qualifications as a fiscal conservative. He has not only cut spending, but also he has cut taxes. New Jersey has a notorious reputation for high taxes and high spending.
Governor Christie takes credit for the current economic environment of New Jersey. In the first two years of his term, he has added private- sector jobs, reduced more than 375 government programs, placed a cap on increased property taxes, and overhauled that state’s pension and employee benefits programs. He plans to outline detail of the entire state budget in February. Christie stated that the intention is to pass that tax relief in phases over the next three years. His plans are a sharp contrast to other governors in liberal states such as New York, California and Illinois. Those Democrat governors raised taxes and targeted successful taxpayers with tax hikes. Christie’s tax cut idea caused thunderous applause at his town hall meeting in the New Jersey suburbs.