In most cases, if you didn’t make an income during the past tax season, you are not required to file a tax return. There are certain limits that you must meet before the tax return must be filed. This cuts out on the paperwork considering younger teenagers may make a few dollars babysitting or doing yardwork and if they make under that amount, it doesn’t need to be claimed. Without an income, you are automatically under this amount and usually won’t have any trouble with your tax return.
But, in some cases, you may find that even without an income, it is a good idea to file your tax return anyway. Depending on your eligible tax credits, you could still get a refund even if you didn’t make any money during the year and the IRS will accept any tax returns that come in, regardless of if there is income reported or not. If you didn’t make any income in this past year but want to find out if you qualify for a refund, make sure to contact some of our professionals to get started today.
Claiming Your Tax Credits
The federal tax credits that you could qualify for will reduce the amount that you are going to owe in taxes. Some of the credits are considered nonrefundable, meaning they are able to reduce the amount that you owe on taxes to zero, but you won’t be able to get a refund on them. But, there are a few credits that will be refundable, such as getting health insurance from the marketplace, having the child tax credit, and so on, that can actually get your tax bill to a negative; read, you will get a refund.
Now, if you don’t work at all during the year, your tax bill is going to be $0. But you can still claim some of the tax credits that are available if you go through the system properly. You may want to sit down with a tax professional, and bring in all your paperwork, to find out if you qualify for any tax credits or if you should consider filing a return at all.
Other Reasons You May File
The IRS will sometimes choose to audit your tax return. Sometimes this is because they saw something suspicious on it or they may just do a random audit to make sure that people are following the rules. If you don’t file a tax return, you will find that the three year period that the IRS is able to audit you hasn’t started. This only starts once the IRS has received your tax return. If you never file a tax return on the no income year, they could do an audit over this year even if it’s ten or more years in the future.
Because of this fact, many people choose to file their tax return even if they didn’t make any money. This gets the ball rolling and forces the IRS do to an audit within the next three years. If they see something wrong after that three year mark, there is nothing they can do with it.
In addition, if you made some money during the year, but under the requirements for filing, you should still consider filing a tax return. Your employer would pay in taxes to the IRS on your behalf, and if you never file the return, you will find that you cannot get the credits or refunds from this money back.
Reporting No Income
There are various forms that you are able to choose from when it comes to reporting your income on a tax return. They are all going to be a little bit different based on your filing status and what all you would like to claim. If your income is nonexistent or very low, you should consider the 1040EZ. This is one off the easiest forms to work on and will just take you a few minutes. But if you would like to get some of the refundable tax credits, or you have something that is a bit more complicated to work on with your taxes, the 1040 is the form for you. You will basically just need to fill out zeros in your income sections to make this work. Talking to a tax professional and explaining your situation can help determine which form in the right one for you.
Understanding when you need to file a tax return and when you are able to avoid this hard time of year can be confusing. In most cases, it is best to report the income, even if you didn’t make anything, on a tax return each year. This can help you out in case of an audit and you could actually make some money back that you weren’t planning on. It will only take a few minutes to get this all filled out if you are low on income for that year, but all the headaches can be avoided and you will have the possibility of getting to make some extra money in the process.
When you are ready to file your tax return and you didn’t make any income in the previous year, it is time to start talking to a professional. They will be able to answer any of your questions and get that tax return done right the first time. Contact our professionals today to get started.
