Not Required to File a Tax Return? You May Be Missing Out if You Don’t

Not Required to File a Tax Return? You May Be Missing Out if You Don’t

  • Learn about tax filing thresholds.
  • Don’t lose your withholdings.
  • Learn about the 2021 Recovery Rebate Credit.
  • Get information about the Earned Income Tax Credit (EITC).
  • Find information on the child tax credit or credit for other dependents.
  • Learn about education credits.

Some people may choose not to file a tax return because they didn't earn enough money to be required to file. However, these folks may miss out on receiving a refund if they don’t file. Although exceptions exist, generally individuals do not have to file a tax return if their income for the year falls below the filing threshold for their filing status as shown in the following table.

Filing a tax return? Learn about tax filing thresholds.

The government distributes many social benefits to lower-income individuals through the tax return. Often these benefits come in the form of a tax credit. But remember – individuals must file a return to claim those benefits, many of which can be substantial. Some of these credits are partially or fully refundable even if an individual has no tax liability. So, even though you might not have to file a return you may miss out on a tax refund if you don’t file one. Here are some examples:

Don’t miss out on your withholding

If you are not required to file a tax return but had income taxes withheld from your W-2 wages, Social Security benefits, retirement income, or investment income, or you made estimated tax payments, you are entitled to have that withholding or estimate payments refunded. However, you must file a tax return to recover the withholding or tax payments.

Tax credits = A good reason to file a tax return for 2021

2021 Recovery Rebate Credit

Individuals who didn't qualify for a third Economic Impact Payment or got less than the full amount may be eligible to claim the 2021 recovery rebate credit. However, you will have to file a 2021 return to claim the credit, even if not otherwise required to file a tax return. The credit will reduce any tax owed for 2021 or be included in the tax refund.

Earned Income Tax Credit (EITC)

A working individual who earned $57,414 or less in 2021 can receive the EITC as a tax refund. For 2021 the amount of the earned income credit ranges from $1,502 to $6,728 depending on your filing status and how many, if any, children you claim on your tax return.

Those who did not file a return for the tax year 2020 or 2021 or who did not claim the earned income tax credit on their 2020 or 2021 return because they had no earned income in those years may file an original or amended return to claim the credit using their 2019 earned income if otherwise eligible to do so.

Child Tax Credit or Credit For Other Dependents

Individuals can claim the child tax credit for 2021 if they have a qualifying child under the age of 18 and meet other qualifications. Other taxpayers may be eligible for the credit for other dependents, again based on meeting qualifications. This includes people who have:

  • Dependents who are age 18 or older.
  • Dependents who have individual taxpayer identification numbers instead of a Social Security number.
  • Dependent parents or other qualifying relatives who the taxpayer supports.
  • Dependents living with the taxpayer who are not related to the taxpayer.

Education Credits

There are two higher education credits that can reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. The taxpayer, their spouse, or their dependent must have been a student enrolled at least half time for one academic period and have paid college or university education expenses to qualify. The taxpayer may qualify for one of these credits even if they don't owe any taxes.

If you do not have to file, and didn’t, contact your Fiducial representative to determine if any benefit can be gained by filing a 2021 tax return. Even if you must file and didn’t, we can help you meet your filing requirements and take advantage of the many benefits available. Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations to discuss your situation.

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