- Category: Individual Taxes
- Written by Madeline Delanni
- Hits: 17361
This is a tricky one. It changes every year, so you will have to visit IRS.gov to be sure you're clear or check the instructions for the various return forms (you can find these at the local post office or library) for specific details that may affect your need to file a tax return with the IRS each year. To be sure, you must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.
Even if you don’t have to file, here are eight reasons why you may want to file:
1. Federal Income Tax Withheld If you are not required to file, you should file to get money back if any Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
2. Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return as well as that for other taxpayers varies each year. Personally, I'd spend the 15-20 mins and at least answer all the questions and fill out a form just to see if you qualify. At about $400 per individual, you'd definitely be making a mistake not to.
3. Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment during the tax year. However, the amount of this credit reduces any making work pay credit you receive. You wouldn't hurt anyone by completing the form a few times, taking different credits for which you qualify and seeing which ones benefit you the most. So, even if your income warrants no need to file, these various credits may make it worth your while.
4. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. If you have children, you owe it to yourself to at least see if you qualify for this credit. It could mean a nice size check for you.
5. Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
6. Refundable American Opportunity Credit This education tax credit is rather new and is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of post-secondary education qualify.
7. First-Time Homebuyer Credit. The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately. See IRS.gov for more information about this credit.
8. Other credits. As the tax laws evolve, the credits keep coming. Don't deny yourself the opportunity to receive credit for something simply because you didn't reach a certain income level.