Tax season refers to the reconciliation of taxes you paid on income earned in the previous year. But what if you were unemployed? If you have not received any income, you may not be required to file a tax return at all.
Suppose you have little income or no income, you can skip filling your tax return and all related documentation. Even if you are not working, consider the situation, maybe it is worth to file an income tax.
Filling up an income tax is completely legal with zero income. And doing so can be good idea for some reasons.
Filling a tax return depends on IRS minimum, if your income last year was below IRS minimum, you do not need to file a tax. IRS minimum depends on your age and filling status, also:
• head of household,
• filing jointly with your spouse or
• you can be claimed as a dependent on someone else’s taxes.
The IRS minimum depends on amount of income from year to year inflation. However, those individuals who has rate below the IRS may still have to file a tax return under following situation; for example, if you had $400 in self-employment earnings, you’ll have to file and pay self-employment tax.
It is not obligatory to file a tax If you have no income.
Credits may earn you a tax refund
You are given a tax credits by IRS, which enable you to take off your taxes rather than your income. And if earned credits are more than total amount of taxes that you have, then you are able to demand the excess as a refund.
In case if you qualified for tax credits, such as the Earned Income Tax Credit or Additional Child Tax Credit, you have an opportunity to receive a refund even if you paid no taxes. To receive the credits, you have to file your 1040 and other tax forms.
File today, deduct tomorrow
The IRS controls the limits of your claims by using various deductions and credits. For instance, you are not allowed to claim a home office deduction so high that it would put your business into the trouble. Despite that, you claim zero business income for the year, and carry any leftover deduction into the next year.
If you have carry-over deductions or credits,
• if you have no income, you can’t claim them but
• you should file your taxes in order to claim them in a future year when you do have income.
Secure yourself from future audits
The operation of IRS is carrying within a statute of limitations when it comes to checking old tax returns.
If your information has been reported accurately, then most probably audits can go back on for three years.
However, it only starts counting for a specific year when you actually file your tax return.
In a situation where you do not apply, the IRS can always come back and conduct an audit. That is why, the IRS recommends that even if you do not apply, you still keep any relevant financial records indefinitely.
In this article we tried to show that even with little income or no income it worth to file a tax return. it is good idea because by filling a tax return tou can earn credits, and excess of credits you can clam tax refund. so do not lose with not filling. Many may lose tax refund simply with no filling a tax return. You must file a tax return to get the money. If you are eligible for a refund, there is usually no refusal penalty. But if you wait too long to file a refund or otherwise claim a refund, you risk losing your refund entirely. In most cases, an initial refund requiring a refund must be filed within three years after the due date for the IRS to process the refund.
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