Who Should File a Tax Return: Explained by Nick Nemeth

Whether you are required to file the income tax return depends on a number of factors such as your income, filing status, age, and dependency. Sometimes, even if you are not required to file a tax return, it may still be in your best interest to file the return. If you are wondering why, Nick Nemeth talks about five reasons why it still makes sense to file income tax return even if you think you do not owe any tax to the government. Take a look.

1. Extra Income Tax Withheld

The Federal tax system authorizes employers to withhold some portion of their employees’ paychecks to pay for the taxes that they might owe to the IRS. Employees could be entitled to a refund in the following scenarios:

  • If their tax liability comes out to be less than the amount withheld by the employer
  • If they have already paid an estimated amount that exceeds their tax liability
  • If they overpaid their tax in the previous year

In all such cases, one needs to file a return to get a refund of the extra amount paid.

2. Earn Income Tax Credit (EITC)

If you, individually or with your spouse, earns less than $50,270 a year, you may qualify for U.S Federal Earned Income Tax Credit (EITC). As far as the amount you can expect in the refund is concerned; families with qualifying children may receive up to $5891. However, you need to file a return to claim the credit if your family income is below the threshold.

3. Additional Child Tax Credit (ACTC)

If you have at least one qualifying child but they do not get the full amount of the Child Tax Credit, you may quality for this additional refundable credit. In such a scenario, you need to use Schedule 8821 – Child Tax Credit – to claim the credit. This is another scenario wherein it is essential to file a return.

4. American Opportunity Tax Credit (AOTC)

If you support a qualifying student, you may be eligible for this tax credit. Students in the first 4 years of secondary education may qualify for as much as $2,500. Even if a taxpayer has no tax liability, they can get up to $1000 as cashback for each eligible student. To claim the refund, use form 8863 and submit it with your tax return.

5. Health Coverage Tax Credit (HCTC)

HCTC is an IRS tax credit against health care insurance premiums. If you are 55-56 years of age and are receiving benefits from the Pension Benefit Guaranty Corporation (PBGC), you may also be eligible for a health coverage tax credit. Spouses and dependence may also be eligible, and can receive 72.5 percent tax credit on payment they made for qualified health insurance premiums. In addition, you may be able to claim HCTC if you are receiving:

  • Trade adjustment assistance
  • Reappointment trade adjustment assistance
  • Alternative trade adjustment or pension benefits payments.

Wrap Up

You may be eligible to claim more than one of these tax credits, but you will not  receive the due benefits if you do not file a return. When it comes to filing a return, it is important to have a professional by your side, who can guide you throughout the process. If you end up owing the IRS more than $10,000 call our office to speak with Nick Nemeth , trusted Tax attorney  in Texas. To schedule a free, no-obligation consultation, simply call (972) 426-2553.