Filing taxes is something many people dread, especially if they think it’s unnecessary due to their lack of income. But did you know filing taxes can benefit you even if you have no income to report?
Explore why you should file taxes with no income and how doing so can work in your favor.
Tax Filing Threshold
The tax filing income threshold is an important concept to understand when it comes to filing taxes. It affects whether you must file taxes and how much you owe the government. The threshold specifies the minimum income requirements to file. It also changes yearly and can differ based on your filing status, age, and other factors.
What is the Tax Filing Income Threshold?
The tax filing income threshold is the minimum amount of income you need to earn to be required to file taxes with the IRS. This amount varies based on age, filing status, and whether you’re claimed as a dependent. In general, the higher your income, the more likely you’ll need to file taxes.
For example, if you were under 65 at the end of 2022, the standard deduction is $12,950 for single filers and $25,900 for married couples filing jointly. You may need to file a tax return if your income exceeds these amounts.
Different Types of Tax Filing Income Thresholds
You should know a few types of tax filing income thresholds. The first is the standard deduction, which we covered above. You won’t need to file taxes if your income is below the standard deduction.
Another threshold is the filing requirement threshold. This is the minimum income level at which you must file taxes, regardless of your deduction amount. Finally, if you’re self-employed, you must pay taxes on any self-employment income over $400. Be sure to carefully review the IRS guidelines to see which thresholds apply to you.
Why You Should File A Tax Return With Little or No Income
Filing your taxes, even with little or no income, can be beneficial in a few ways. For example, filing taxes can help you qualify for a refundable tax credit or deduction. Tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit can help boost your tax refund even if you don’t have any taxable income. It’s important to know you won’t receive these credits if you don’t file your taxes, so even if you don’t have a lot of income, filing your taxes is still worth doing. Not only that, but if you’re eligible for these credits and miss out on them, you’re essentially leaving money on the table.
Additionally, if you’re self-employed or a small business owner, you must report business expenses and losses for your records, even if you didn’t earn any money. This can help when it comes time to offset future income or seek government assistance. It’s important to keep track of all these things, and filing your taxes annually is a great way to keep everything organized.
Finally, filing taxes provides a clear paper trail of your financial situation. This can be handy if you apply for a loan, financial aid, or government program. Even if you don’t have much income to report, having a record of your tax returns can help prove your financial status and make getting approved for these kinds of things easier. A common misconception is a financial advisor is only for people who have a significant amount of money to invest. However, their expertise can provide greater detail in this area.
How to File with Little or No Income
You can take steps to make the process of filing taxes with no income. From determining your filing status to submitting your tax refund forms, we have steps for you to consider below.
Determine Your Filing Status
Before filing your taxes, you need to determine your filing status. This depends on your marital status as of December 31st of the previous tax year, as well as whether you have dependents.
There are five filing statuses:
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Widow(er) with Dependent Child.
Make sure you select the correct status to avoid any mistakes.
Determine Your Filing Requirements
As mentioned, the IRS sets income thresholds for minimum gross income required to file income taxes. The most recent update from the IRS dictated that for the tax year 2022, those who were single and younger than 65 would need to file a tax return if their income was above $12,950. For married couples filing jointly, the threshold is $25,900. If your income is below these thresholds, you are not required to file a federal tax return. If in doubt, consult the IRS guidelines for additional information.
Gather Your Forms
If you meet the IRS filing criteria or would still like to file for the benefits mentioned above, you’ll need a tax form. When it comes to filing taxes with no income, you’ll want to look for Form 1040, 1040A, or 1040EZ. You can download these forms from the IRS website, pick them up at your local library, or ask for them to be mailed to you.
If you have had any taxes withheld from previous employers or paid any tax liabilities in the previous year, make sure to check for Forms W-2 or 1099 to include with your tax return.
Fill Out Your Tax Forms
When filing your taxes, the next step would be to fill out your tax forms. Generally speaking, you’ll need to provide your personal information, such as name, social security number, and address, regardless of which form you use. You’ll also need to fill out any tax credit forms you’re eligible for, such as the earned income tax credit or child tax credit.
Submit Your Tax Forms
After you determine your filing requirements and gather your forms, you must submit them. You can file your tax return through the mail or electronically using tax software or the IRS Free File program.
Filing taxes with no income may seem like a hassle or an unnecessary burden, but it’s essential to consider its advantages. Besides having a chance to gain financial assistance and certain refundable tax credits, filing tax returns can contribute toward building and maintaining a good credit history. It can even prepare you for situations where you might have more complex tax matters to handle in the future.
The process may be relatively simple, but the benefits of filing IRS tax returns with no income can make the time taken worth it to many. If you have additional questions about if you’re required to file taxes, what your status is or need help filing a tax return, work with a financial advisor or a tax professional.
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