This is a question many taxpayers ask during this time of year,
and the question is far more complicated than people believe. To fully
understand, we need to consider that there are times when individuals are REQUIRED to file a tax return, and then
there are times when it is to the individuals’ BENEFIT to file a return even if they are not required to file.
are required to file:
Generally, individuals are required to file a return if their
income exceeds their filing threshold, as shown in the table below. The filing
thresholds generally are the same amount as the standard deduction for
Taxpayers are required to file if they have net self-employment
income in excess of $400, since they are required to file self-employment taxes
(the equivalent to payroll taxes for an employee) when their net self-employment
income exceeds $400.
Taxpayers are also required to file when they are required to
repay a credit or benefit. For example, taxpayers who underestimated their
income when signing up for health insurance through a government Marketplace
and received a higher advance premium tax credit (APTC) than they were entitled
to, are required to repay part of it. Therefore, all individuals who received
an APTC must file a return to reconcile the advance payments with the actual
credit amount, even if their income is less than the filing threshold amount
and even if they don’t need to repay any of the advance credit.
Filing is also required when a taxpayer owes a penalty, even
though the taxpayer’s income is below the filing threshold. This can occur, for
example, when a taxpayer has an IRA 6% early withdrawal penalty or the 50% penalty
for not taking a required IRA distribution.
2019 – Filing
Status Age Threshold
Age 65 $12,200
Age 65 or Older $13,850
Married Filing Jointly Both
Spouses Under 65 $24,400
Spouse 65 or Older $25,700
Spouses 65 or Older $27,000
Married Filing Separate Any
Head of Household Under
or Older $20,000
Qualifying Widow(er) Under
with Dependent Child 65
or Older $25,700
is beneficial for individuals to file: There are a number of benefits
available when filing a tax return that can produce refunds even for a taxpayer
who is not required to file:
– A substantial number of taxpayers fail to file their return even when
the tax they owe is less than their prepayments, such as payroll
withholding, estimates, or a prior overpayment. The only way to recover
the excess is to file a return.
Income Tax Credit (EITC) – If you worked and did not make a
lot of money, you may qualify for the EITC.
The EITC is a refundable tax credit, which means you could qualify for a
tax refund. The refund could be as high as several thousand dollars even
when you are not required to file.
– This is a $2,000 credit for each
qualifying child, a portion of which may be refundable for lower income
taxpayers, and phases out for higher income taxpayers.
Opportunity Credit – The
maximum for this credit for college tuition paid per student is $2,500,
and the first four years of postsecondary education qualify. Up to 40% of the
credit is refundable when you have no tax liability, even if you are not
required to file.
Premium Tax Credit – Lower-income families are entitled to a refundable
tax credit to supplement the cost of health insurance purchased through a
government Marketplace. To the extent the credit is greater than the
supplement provided by the Marketplace, it is refundable even if there is
no other reason to file.
DON’T PROCRASTINATE! There is a three-year statute of limitations
on refunds, and after it runs out, any refund due is forfeited. The statute is
three years from the due date of the tax return. So, the refund period expires
for 2019 returns, which were due in April of 2020, on April 15, 2023.
For more information about filing requirements and your
eligibility to receive tax credits, please contact this office.