Believe it or not, there are some lucky Americans who don’t actually have to file a tax return this year — and you might be one of them. It all depends on your income, tax-filing status, and a few other things.
But just because you don’t have to submit a return doesn’t mean you shouldn’t. There’s a huge upside to filing your taxes that you really don’t want to miss out on.
How do you know if you need to file your taxes this year?
You may not have to file your taxes if your 2023 income was lower than the standard deduction for your tax filing status. The table below gives the standard deductions for all statuses so you can find yours:
You may also be able to skip your 2023 taxes if you paid enough in payroll taxes during the year to cover your tax liability. The IRS has resources available to help you determine whether you need to file.
There are some special situations where you may still need to file a return, even if you had little to no income last year. These include earning more than $400 in self-employment income during the year or owing alternative minimum tax.
Be sure to review the above rules carefully before determining that you don’t have to file taxes. If you guess wrong and you owe the IRS, you’ll face failure to file penalties worth 5% of your unpaid taxes per month until you file your return, with a cap of 25% of your unpaid taxes. You’ll also owe failure to pay penalties of 0.5% of your unpaid taxes per month, also with a cap of 25% of the unpaid taxes.
Why would you want to file taxes if you didn’t have to?
Filing taxes is often a smart move even if you suspect you don’t owe anything. You may have paid more in taxes throughout 2023 than you actually needed to, and that means you’re owed a refund from the IRS. But the IRS won’t give it to you unless you file a return proving what you paid in taxes throughout the year and what you actually owed.
You may also want to file a return if you believe you’ll qualify for refundable tax credits. Tax credits offer dollar-for-dollar reductions of your tax bill, and refundable tax credits can actually bring your tax liability below zero. Let’s say you owed $500 in taxes and you qualified for a $1,000 tax credit. The first $500 of that would wipe out your existing tax liability, meaning you’d owe the IRS nothing. But since it’s a refundable credit, the IRS would give you the remaining $500 as a refund.
It’s ultimately your call, but it takes most people a couple of hours to file their return with tax software, and it could result in a refund worth thousands. And if you want to file your return but don’t feel comfortable doing it yourself, you could always enlist the help of a tax professional. You’ll pay a fee, but it can get you your money with almost no effort on your part.
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