Not required to file taxes? 7 ways you may be leaving money on the table
While not every taxpayer is required to file a tax return, there are several potential benefits to doing so. Yes, getting a refund back is one. But, in addition to not leaving money on the table, there are a few other reasons why you may want to file this tax season.
If you’ve ever asked, “do I have to file a tax return every year,” you might be simply thinking about making sure you’re in line with IRS rules. But with that approach, you miss out on why you may want to file. So, let’s change the question from “am I required to file taxes?” to “what are the potential benefits of filing taxes?”
Reasons to file, so you’re not leaving money on the table by not claiming available credits
Generally, you’ll have a filing requirement if your income is above a certain amount, or you owe taxes. To lower your tax bill, you can claim various tax deductions and credits. But some credits are “refundable” which means you could get that money back as a tax refund if you file an income tax return.
Below, we outline some of these refundable credits and other reasons you could get refund dollars back when you file. Plus, there are a few potential benefits of filing taxes that have indirect advantages too.
Refundable credits that may get you money back
- Child Tax Credit. The increased 2021 Child Tax Credit has a value of up to $3,600 per child.
- Recovery Rebate Credit. This credit lets you claim 2021 stimulus payments, up to $1,400.
- Earned Income Tax Credit. The Earned Income Tax Credit, valued up to $6,728 (up to $1,512 if you have no children), often goes unclaimed due to complex rules.
- American Opportunity Credit. If you have a student with qualified higher education expenses, the American Opportunity Credit could mean getting up to $1,000 back as a refundable credit.
Be sure to read the related posts above to learn more about these credits and whether you may be eligible.
Refunds for overpaid taxes and deductions to lower your tax bill.
- Refund of overpaid federal income taxes from last year’s tax filing.
- Refund of overpaid state taxes from last year’s tax filing.
- State property tax deductions. Up to $10,000 can be deducted from your federal tax bill.
Potential indirect benefits to filing taxes
- Updates your information with the Internal Revenue Service (IRS) in the event you’re eligible for future stimulus payments or other federal programs.
- Provides proof of income for most loan or mortgage applications.
- Helps prevent tax identity theft for yourself, a spouse, or dependent.
- Provides proof of income for guardians of dependents filing a FAFSA.
- Fulfills filing requirements for a taxpayer on a visa.
Get help with your tax filing and claiming credits and deductions you deserve
Diving deep into tax rules to understand whether credits or deductions are available and you could be leaving money on the table can take a lot of work. If you’re not required to file taxes, don’t let complex rules hold you up. Rely on the expertise of H&R Block to uncover it for you.
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