5 Key Reasons Why You Must File Tax Returns Every Year Without Fail

Who must file income tax return? Now, this is one question some people struggle with nowadays. Do you have to file an income tax return if you are do not earn much? These are some golden questions that trouble many people. 

John Lennon of Beatles didn’t file taxes for so many years. Some people do not have to file their tax returns as well. 

Who is Exempt from Filing Taxes

People who earn around $3000 or more in a fiscal or a financial year need to pay taxes. When you do not owe any taxes, rest assured, you will not get any financial penalty when you do not file your tax returns. Here are some of the circumstances that you might be living in and might be why you will be exempt from the taxes. 

  1. You get your income from disability benefits. Neither you nor your employer is paying any premium.
  2. All of your income comes from social security benefits. If you are single, you are earning in and around $25,000, and if you are married, you are getting about $34,000.
  3. You are single, under 65 years of age, and your income is $12,400 or less in a year. And, you did earn this amount outside of self-employment. This income can, however, come from unemployment benefits. If you are married and are filing income tax with your spouse, your earnings for the year should be less than $24,800.

You do not have to pay taxes to the IRS if you fall under any of the listed categories. While you will not get any penalties for not filing taxes, it is always best to file the income tax. 

Here are some key reasons you must file income tax even though you do not get any penalty. 

You Might Be Eligible For a Refund

While it is true that you do not owe anything to IRS, however, how sure are you that IRS doesn’t owe anything to you. Sometimes, you can pay too much money towards the payroll taxes. That means you are going to give the government freely the money that belongs to you. You will be astonished to know that there is more than $1.5 billion worth of unclaimed refunds from 2016 in the IRS kitty. 

Fastly Get Your Stimulus Check 

From April, qualified households were getting a stimulus check from the government. The government used the data as shown in previous years’ IT returns to decide who can get the check. They did not include all those who did not file in 2018 and 2019 from the first round of payout. 

A lot of people are waiting for these payments. Do not forget that when you do not file returns, you might also miss the opportunity if the government decides to give similar checks in the future. 

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Government Can Audit You Going Back to Any Year They Want

IRS can challenge you in the next three years of you filing your tax return. But, if you do not file taxes and the government discovers that you had a large chunk of income some ten years back, they can call you for an audit. It is because you never filed a return, and thus the three-year clause does not apply in this case to you. 

Become Eligible for Tax Credits

The government offers some excellent tax credits that you might not be eligible for if you do not file your taxes. For example, the American Opportunity Tax Credit helps cover your educational expenses. Why miss this kind of benefits by not filing your income tax. You will have to bear financial pressures if you do not choose to file taxes. 

Some States Have a Lower Threshold 

Though the standard deduction for federal taxes might only apply if you earn a certain amount, for example, you should make around $12400 when you are single and $24,800 for married couples, the state government might have lower thresholds than it. Hence, even though you do not owe anything to federal taxes, you might have to pay taxes toward state taxes. 

Who must file income tax return? Everyone to enjoy the benefits mentioned above. Take the help of a professional tax preparer if you do not know how to file your returns.