There are a lot of people who have not filed a tax return for 2021 because they didn’t earn enough money to be required to file. But some of these people may miss getting a refund if they don’t file. Yes, they may be entitled to government money that comes through the tax system or they might have had withholding that they are entitled to get back as a refund.
The fact is, a lot of people might be entitled to a surprise refund on their 2021 taxes. And they might even be entitled to refunds from previous years because they didn’t file in previous years.
The filing deadline for your 2021 tax return is October 17, 2022 if you filed for an extension. Even if you didn’t file for an extension you can still file your tax return to claim a refund. And remember, if you owe taxes, the sooner you file the lower your taxes and penalties will be.
By the way, remember that the IRS has dropped the failure to file penalty on 2019 and 2020 tax returns to give taxpayers a break because of the Covid Pandemic.
Here are some reasons you might want to file even if your income was so low that you’re not required to file:
THERE MAY BE TAXES WITHHELD OR TAXES YOUR PAID
You might have had a part time job or some gig work in 2021 and some tax was withheld for that work. If there was tax money withheld filing a tax return for 2021 is the way to get it back.
Seniors and retirees who make estimated tax payments or have money withheld from their retirement fund and Social Security disbursements may also be eligible for a refund. Again, filing a tax return for 2021 will allow you to get that money refunde.
Did you overpay taxes in 2020 and have it applied to your 2021 taxes? A lot of taxpayers choose this option and “pay ahead.” You’ll need to file a 2021 tax return to get that money returned.
THERE MAY BE VALUABLE TAX CREDITS TO CLAIM
Another reason to file a 2021 tax return — even if you had low income and aren’t required to file a tax return — is that you might be entitled to certain tax credits. These tax credits require you to file a return. While most tax credits can be used to reduce the tax owed, there are credits that allow individuals to receive money beyond what they owe and that means a payment from the Treasury to you. Here are some of those credits that could mean money in your pocket:
THE RECOVERY REBATE CREDIT
Individuals who didn’t qualify for a third Economic Impact Payment or got less than the full amount will need to file a 2021 tax return to get it.
THE EARNED INCOME TAX CREDIT
A working taxpayer who earned $57,414 or less last year could receive the Earned Income Tax Credit, referred to as the EITC, as a tax refund. For the 2021 tax year. You file the tax return now and the earned income credit ranges from $1,502 to $6,728 depending on your filing status and how many children you claim on your tax return. Taxpayers who did not file a return for 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 they are otherwise eligible to do so.
Taxpayers can also use their 2019 earned income to figure their 2021 earned income credit if their 2019 earned income is more than their 2021 earned income.
CHILD TAX CREDIT OR CREDIT FOR OTHER DEPENDENTS
Taxpayers can claim the child tax credit 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.
If you have any doubts or questions about these tax credits do contact a tax professional.
DID A CASINO WITHHOLD PART OF A JACKPOT?
Did you hit a jackpot at a casino during 2021? If you did hit a jackpot, it is possible that you had part of that jackpot withheld as taxes due. But you might not have any taxes due if your overall losses were equal to or greater than your casino winnings. Check those W2G forms a casino gave you and look to see if any taxes were withheld. If there were taxes withheld, you’ll have to file a tax return to get that money back. This is why you should keep a record of all your casino play during the year — and that includes the purchase of lottery tickets, too. Losses on lottery tickets can be counted to offset your casino wins.
YOU MAY NEED TO FILE FOR THE FRESH START OR OFFER IN COMPROMISE
You also may need to file a tax return if you have tax debt and you are seeking a Fresh Start Program or an Offer In Compromise Program with the IRS. The IRS has a requirement for filing missing returns and a tax return showing your low income can also improve your case for the Fresh Start Program and the Offer In Compromise Program.
Our tax experts at Tax Relief Info can tell you in 15 minutes or less if you can qualify for the IRS Fresh Start Program or the Offer In Compromise Program. You can get this free consultation by calling us. Even if you don’t qualify for the Fresh Start Program or the Offer In Compromise Program our tax experts can discuss with you other options to resolve your IRS tax debt issues.
THE IRS LIMITS THE TIME TO CLAIM REFUNDS
By the way, the IRS generally has a 3-year limit on the time allowed to file a tax return in order to claim a refund. Remember that.