Not all taxpayers are required to file an income tax return. In most cases, if your earnings fall below the standard deduction for your filing status and age, you won’t need to file. Even if you’re not required to file taxes, however, that doesn’t mean you shouldn’t. There are several benefits to doing so – especially if you have dependents. In this post, we’ll take a look at four reasons why you may want to take the time to submit your tax return.
Who Has to File a Tax Return?
In general, your age, filing status, and the type of income you earn, as well as the amount, will determine whether you need to file or not.
For the 2022 tax year, the following income limits apply if you cannot be claimed as a dependent on another taxpayer’s return.
|Filing Status||Under age 65||Over 65|
|Married Filing Jointly||$25,900||$28,700 ($27,300 if only one is 65+)|
|Head of Household||$19,400||$20,800|
|Married Filing Separately||$5||$5|
|Qualifying Widow(er)||$25,900||$28,700 ($27,300 if only one is 65+)|
Even if your income falls below the given threshold for your age and filing status, you may still be required to file under certain circumstances. For example, those who are self-employed and earn more than $400 must file.
4 Reasons to File Even If You Aren’t Required to Submit a Return
If you’ve determined that you’re not required to file a return this year, you may wish to do so anyway. Here are four reasons why it makes sense to file.
Refund of Overpaid Income Taxes
Did you have income tax withheld from your paychecks? If so, you’ll want to file a return. Generally, you do not have to pay taxes on earnings that fall under the filing threshold. If any were taken from your paychecks, however, you could be owed a refund!
Tax Credit Refund
You may also receive a tax refund if you are eligible to take any of the following refundable tax credits.
- American Opportunity Tax Credit. You may receive a refund of up to $1,000 if you paid eligible college expenses for yourself, your spouse, or a dependent.
- Child Tax Credit. If you have a child under 17 at the end of 2022, be sure to take advantage of this tax credit. It’s partially refundable, up to $1,500 per qualifying child.
- Earned Income Tax Credit. This refundable tax credit, if eligible, is valued between $560 and $6,935, depending on the number of children you claim.
Even if you didn’t pay taxes or you’re ineligible for any of the refundable tax credits, there’s another perk for filing your return – tax audit protection. The IRS must adhere to the statute of limitations (typically three years) when it comes to auditing your tax return. The clock, however, doesn’t begin until your return is filed. Choosing not to file means that the IRS can come back and audit you at any time.
Additionally, failing to file your tax return can put you at risk for tax fraud and identity theft. By filing early and annually, you’ll make it harder for someone to use your information to obtain fraudulent loans, credit cards, and/or tax refunds.
Although filing a tax return may seem like a hassle, it may well be worth the effort. Not only could it provide you with a nice tax refund, but also serve as income verification in a variety of situations. Many loan lenders require tax returns as part of their application process. If you have a child planning to attend college, you’ll need it for the FAFSA and to secure any institutional financial aid. It’s also the best way to ensure you have access to any money that may be offered through future relief efforts, such as those received during the pandemic.