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2007 Tax Guide    
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TAX TIP No. 74
A wrong address can mean lost tax refund

Last year, the Internal Revenue Service ended up with more than $92 million it didn't want. That's the amount of unclaimed refunds that were returned to the agency because the checks were undeliverable.

In this tax tip:

Don't become one of those owed taxpayers this tax season. Make sure your 2006 tax-return address is correct -- whether you write it in, type it on your computer or use a preprinted label. A wrong address means missed money.

Why refunds go astray
There are several reasons why the IRS might have a filer's wrong address.

Often people move and forget to tell the tax collector. This is frequently the case with college students, who file their returns in the spring using a campus address and then leave for the summer expecting the refund check to follow them.

Although the IRS is now working with the U.S. Postal Service to get updated addresses from the cards relocating taxpayers turn into their local branches, it's better to deal directly with the tax agency. Send the IRS a Form 8822, Change of Address, to make sure your tax correspondence follows you.

Other undelivered refunds can occur because taxpayers provide an incorrect address when they mail their return. This often is as simple as transposed numbers or the use of "Avenue" instead of "Street." Double-check your address entry before you seal the envelope or hit "send."

Report major life changes
A death or marriage also could result in a returned check. Estate executors need to explore whether a final refund might be involved.

Newly married taxpayers should notify the IRS promptly when they move into their new shared home. When marriage also means a name change, let the Social Security Administration know, too, so that a tax ID matches the new married name.

Undelivered refunds will eventually get to the filers when they submit new returns with correct addresses. The IRS computers will match the Social Security numbers on those new forms to the unclaimed checks.

But why wait for your money? Send in a Form 8822.

Or better yet, the IRS says you can prevent lost or misdirected checks by having your refund directly deposited. You now have the option to divide your refund and electronically send it to up to three different accounts.

When the money goes straight into your bank account, there's much less worry that it will go astray, either lost in the mail or stolen from your mailbox.

Freelance writer Kay Bell writes Bankrate's tax stories from her home in Austin, Texas, and blogs each day on tax topics at Don't Mess with Taxes.

-- Updated: April 5, 2007
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