Millions of citizens have left their money unclaimed under California’s Middle Class Tax Refund (MCTR), which provided residents with a sizable one-time inflation relief payout. What happens to the money if the debit card is never picked up?
Payments were made between January 2022 and January 2023, but since around 10 million cards remained unclaimed, about $611 million was just lying around to be retrieved by the qualified receivers.
In view of this, the California Franchise Tax Board (FTB) is requesting—despite resistance from certain locals—that individuals activate their MCTR cards and furnish updated information if they never received one.
If the card is not activated, the recipient runs the risk of losing $200–$1000 to fraud. Hackers have lost about 1% of the total funds, and they are pursuing unclaimed cards in an attempt to obtain free money.
The grant should be available to everybody who timely filed their 2020 tax returns and made less than the MCTR threshold in 2020, albeit this gets challenging if their banking and address information is lacking.
What causes tax refunds and why do we get them?
In the United States, the system of projected tax payments and tax withholding is the main cause of tax refunds. Employers deduct a certain amount from an employee’s paycheck each year to cover federal, state, and occasionally municipal taxes.
In a similar vein, self-employed people pay estimated taxes on a quarterly basis. The government reimburses the difference if the total amount withheld or paid beyond the taxpayer’s actual tax due as determined by filing their tax return.
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Additionally, there are a number of credits and deductions available to taxpayers that lower their total tax obligation.
A refund may be obtained if the credits exceed the taxes payable. Credits such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and education credits can considerably lower the amount owed.
For qualified taxpayers, these credits and deductions are essential in helping them financially and frequently result in a refund.
Due to careful withholding or mistakes in estimating tax liability, taxpayers may pay more than they should because of the complexity of the US tax code. In essence, tax refunds indicate that taxpayers have extended an interest-free loan to the government for the entire year.
