When and Why You Should File
Tax season is in full bloom with preparer commercials flooding the air waves and “Tax Filing This Way” signs being waved on every corner. The good news is that some of you out there won’t need to go through the hassle of filing this year. The bad news is that if you don’t file a return, you’ll have no chance of receiving certain tax credits.
As a U.S. Citizen or Resident Alien, you only have to file if you made a certain amount of money in 2011, and that amount varies based on your age, your filing status, and the type of income you received. Let’s say you were under 65 years old at the end of 2011, single, and made over $9,500 last year. You earned more than the minimum gross income, so you must file a return. However, if you are under 65, married, and want to file jointly with your spouse, you need to do so only if your gross income was at least $19,000. The IRS provides a handy-dandy chart with explanations for you to decide which categories apply to you.
Of course, there are all sorts of different situations that complicate these rules. Maybe you were self-employed and you made $800 last year. It might seem like a small amount, but if you earn over $400 working for yourself, you must submit a return. Or perhaps you owe certain special taxes, such as the Alternative Minimum Tax, or Recapture Taxes – once again, you’re going to be filling out a return in the next few months.
These are some reasons why you’re required to file, but even if none of them apply to you, you could still benefit from sending in a return. It’s the only way you can get a refund on that federal tax your employer withheld from your paycheck, or that overpayment you made on your 2010 taxes. There’s also the Earned Income Tax Credit, which is a refundable tax credit for people who worked, but barely made any money.
Sometimes kids are a good thing, especially when it comes to taxes. Maybe you decided to adopt last year and need help with all of the fees you paid during the process. You might be eligible for the Adoption Credit, a refundable tax credit for those adoption expenses. If your son or daughter (or both) attends college, you can offset the cost of their tuition with the American Opportunity Credit. Each student is eligible for a maximum $2,500 and 40% of the credit is refundable. It doesn’t take a math major to realize you should file a return even if you owe no taxes: you can still receive as much as $1,000 cash back for each student. So think twice before you set aside your financial records for next year – you might be missing out on the money you deserve.On the Money,
Sufen Wang
Wang Solutions
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