Do I have to file taxes this year?
Not all Americans file tax returns, and in truth, not all need to. However, there are some good reasons that can be counted in cash why you might want to file a return, even if you don’t have to.
In this video, Better Money Habits outlines who has to file a return, and who might benefit from filing, even if it’s not required.
You need to file a return if:
- Your gross income exceeds a specific limit set by the IRS, determined by your age and marital or family status. If you’re 65 or older, limits are generally a bit higher. Specific definitions and limits can be found at gov.
- You are claimed as a dependent, but your income level meets a specific threshold. Most dependents don’t need to file a tax return, but it’s important to know how much you’ve made and what the threshold is for the current tax year. The IRS’s Interactive Tax Assistant tool can help you determine whether or not you’re required to file while being a dependent.
- You earned more than a certain amount of self-employed income, as determined by the IRS. This income may be from a part time job, a side gig, or freelance position, to name a few sources.
Did you know that more than 70 percent of people who file a tax return receive a refund?
The most potentially valuable benefits of filing when you’re not required to are refundable tax credits. If your income is below the limits mentioned above, you may qualify for tax credits that would not only reduce what you owe to the IRS, but may even result in a check from the IRS for all or a portion of that refundable credit.
There are a lot of credits that you may qualify for. Check out recent blog posts from America Saves here or here about the Earned Income Tax Credit (or EITC) and the Additional Child Tax Credit. You could also get a refund simply if more taxes were withheld from your paycheck than the amount you owe, which is common.
Taxes are an important part of your financial picture, but they don’t need to be overwhelming. Take advantage of the tools that the IRS provides to help find out if you need to file, how to do so (for free), and what to expect when you do. You’ll then be on the path to receiving a financial windfall you might not have thought was coming your way, and relishing a new opportunity to build wealth and save money.
Need motivation to keep that tax refund you earned in your savings account? Let America Saves help! It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.
- Written by Tammy G. Bruzon
- Category: Blog
- Published: 17 March 2017