Extension Filers Series: I Don’t Think I Made Enough Money to File Taxes. Why Should I?
The October 15th tax extension deadline is here and year after year the IRS reports that people are leaving about $1 billion in unclaimed tax refunds on the table, because they think they don’t make enough money to file taxes. Plenty of citizens who have low income don’t technically have to file their taxes, but even if your gross income falls below the IRS guidelines, it’s usually a good idea to spend a little time to file your taxes for reasons we’ll go into.
Why You Should File (Even if You Don’t Think You Have To)
Even if you don’t think you make enough money to file an income tax return, it’s still a good idea to file. There are some circumstances in which you might actually be eligible to get some money back, and if you don’t file your tax return, you won’t get that money. Here are two good reasons to file:
1. Tax withholdings: Is your workplace withholding money from your paycheck for federal income taxes? If so, then the government may owe you money. If you want that tax refund from your withholdings, you need to file a tax return.
2. Refundable tax credits: There are a number of tax credits offered to those with lower incomes. These tax credits are refundable, or partially refundable, meaning that you may get excess money refunded even if there is no tax liability to apply the tax credit to.
Credits like the Earned Income Tax Credit and the Child Tax Credit can mean more money in your pocket. The average EITC is $2,000. Each year, there are different tax credits and opportunities and TurboTax gets you the refundable tax credits available if you qualify. It’s worth it to file a tax return in order to get that money.
Filing your tax return is one way to make sure that you are getting the money that you are entitled to. Double-check your situation. Even if you don’t have to file a tax return, it might be to your financial benefit if you decide to file anyway because of over withholding and refundable tax credits.