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Do I Owe Taxes on Unclaimed Funds?

Many people are owed unclaimed money or property.  According to the National Association of Unclaimed Property Administrators, approximately one in ten people are owed money or property. Here’s how to know if Do I Owe Taxes on Unclaimed Funds?

And there is a lot of money – billions upon billions of dollars in money and property.

Sometimes people ask if they will owe taxes on unclaimed funds, that is if they receive the money or property.  The answer is generally “no” you won’t owe taxes.

The money or property you are receiving is already yours – it is just being held by the state.  And when you request, it simply means that you requesting your own money or property back.

Taxing authorities (meaning IRS, state, and local tax departments) generally tax income, not property.  And income is generally defined as your gaining wealth – such as money, not as the property you already hold.

If You Owe Taxes on Unclaimed Funds, are they significant?

There are taxes called “ad valorum” taxes that are taxed on the property.  Those are generally assessed at the local level and are a low percentage of the value of the property. They would generally not add up to all that much as a percentage of the value of the property.

So, other than low-cost ad Valorem taxes, you will likely not owe taxes on property you receive from the state treasurer or other entity you are being taxed by.

And even if you are taxed on the money or property the taxes are less than the value of the property, so you are far better off claiming your money and property rather than abandoning it to the state.

Note that as with all tax and legal matters your individual circumstances will determine the taxes you owe.  But I can say with confidence that you will be ahead by claiming your money.  In the event you owe something it will be less than that which you receive.

But check with your tax advisor to ensure you pay what you owe and comply with the laws.