Any year you have minimal or no income, you may be able to skip filing your tax return and the related paperwork. Before you decide to skip your return this year, consider whether it might be worthwhile to file.
Key Takeaways
- It's perfectly legal to file a tax return even if your income falls below the IRS minimum requirement to file.
- If you qualify for certain tax credits but owe no tax, you might be able to claim the excess tax credit as a refund when you file your return.
- Filing a tax return typically starts the clock running for the amount of time the IRS can audit your return for a given year. If you don't file, the IRS can come back and perform an audit for that year.
You may have heard about a possible change to the Child Tax Credit, but don’t worry. TurboTax has you covered. We are up to date with the latest tax laws so you can file your taxes with confidence and accurately claim the Child Tax Credit, if you are eligible. There is no need to delay. File now to get your max refund as soon as possible.
If lawmakers expand the Child Tax Credit, the IRS has stated that they will automatically adjust your return and notify you of the update, including any additional refund. No extra steps are required on your part.
Any year you have minimal or no income, you may be able to skip filing your tax return and the related paperwork. However, it's perfectly legal to file a tax return showing zero income, and this might be a good idea for a number of reasons.
Income requirements
Even if you earned income last year, if it falls below the IRS minimum you don't have to file a tax return. The minimum varies according to your age and filing status—whether you are:
- single,
- head of household,
- filing jointly with your spouse or
- you can be claimed as a dependent on someone else's taxes.
The IRS also adjusts the minimum amount of earned income from year to year for inflation. Individuals who fall below the minimum may still have to file a tax return under certain circ*mstances; for instance, if you had $400 in self-employment earnings, you'll have to file and pay self-employment tax.
If you have no income, however, you aren't obligated to file.
Credits may earn you a tax refund
The IRS offers a number of tax credits that you can take directly off your taxes rather than your income like a deduction. If the credit is more than you owe in taxes, in some cases, you can claim the excess credit as a refund.
If you qualify for tax credits, such as the Earned Income Tax Credit or Additional Child Tax Credit, you can receive a refund even if your tax is $0. To claim the credits, you have to file your 1040 and other tax forms.
For your 2021 tax return only, the Child Tax Credit is expanded by the American Rescue Plan raising the per-child credit to $3,600 or $3,000 depending on the age of your child. The credit is also fully refundable for 2021. To get money into the hands of families faster, the IRS will be sending out advance payments of the 2021 Child Tax Credit beginning in July of 2021.For updates and more information, please visit our2021 Child Tax Creditblog post.
TurboTax Tip: If you qualify for tax credits, such as the Earned Income Tax Credit or the Child Tax Credit, you can receive a refund even if your tax is $0. To claim the credits, you have to file your 1040 and other tax forms.
File now, deduct later
The IRS limits how much you can claim with various deductions and credits. For example, you can't claim a home office deduction so large that it would put your business into the red. Instead, you claim zero business income for the year, and carry any leftover deduction into the next year.
If you have deductions or credits carrying over,
- you can't claim them if you have no income, but
- you need to file your taxes to claim them in a future year when you do have income.
Protect yourself from future audits
The IRS operates under a statute of limitations when it comes to auditing old tax returns.
If you've reported your information accurately, in most cases they can only go back three years. However, the clock only starts for a given year when you actually file your tax return.
- If you don't file, the IRS can always come back and perform an audit.
- For this reason, the IRS recommends that even if you don't file, you still keep any relevant financial records indefinitely.
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FAQs
Any year you have minimal or no income, you may be able to skip filing your tax return and the related paperwork. However, it's perfectly legal to file a tax return showing zero income, and this might be a good idea for a number of reasons.
Do I have to file a tax return if I didn't make enough money? ›
Some people may choose not to file a tax return because they didn't earn enough money to be required to file. Generally, they won't receive a penalty if they are owed a refund. But, they may miss out on receiving a refund.
Can I file taxes with no proof of income? ›
If you cannot get a copy of your W-2 or 1099, you can still file taxes by filling out Form 4852, “Substitute for Form W-2, Wage and Tax Statement.” This form asks for information about your wages and taxes that were withheld.
Is there any reason to file a tax return if you have no income? ›
While people with income under a certain amount aren't required to file a tax return because they won't owe any tax, if you qualify for certain tax credits or already paid some federal income tax, the IRS might owe you a refund that you can only get by filing a return.
Do I have to file a tax return if I have no earned income? ›
So, if your income is less than the standard deduction, and you don't have other income to report, you won't need to file a tax return. An example of income that you would need to report, regardless of the amount , is self-employment income.
How to file a nil income tax return? ›
There is no separate process or form for filing nil income tax return, and the entire process is similar to filing a normal return. The form to be used also remains the same. If you are someone whose income is below the basic exemption limit, then this article is for you.
How much money do you have to make to do a tax return? ›
If you were under 65 at the end of 2023
| If your filing status is: | File a tax return if your gross income was at least: |
|---|
| Single | $13,850 |
| Head of household | $20,800 |
| Married filing jointly | $27,700 (both spouses under 65) $29,200 (one spouse under 65) |
| Married filing separately | $5 |
1 more rowApr 5, 2024
Here are options for showing proof:
- Employment verification letter. ...
- Signed offer letter. ...
- W-2s, 1099s, and tax returns. ...
- Official statement/letter from a CPA or trust manager. ...
- Bank statements. ...
- College financial aid documents. ...
- Guarantor.
You can claim the credit whether you're single or married, or have children or not. The main requirement is that you must earn money from a job. The credit can get rid of any federal tax you owe at tax time. If the EITC amount is more than what you owe in taxes, you get the money back in your tax refund .
Can you get a Child Tax Credit if you have no income? ›
No. You do not need income to be eligible for the Child Tax Credit if your main home is in the United States for more than half the year. If you do not have income, and do not meet the main home requirement, you will not be able to benefit from the Child Tax Credit because the credit will not be refundable.
You can't claim the EIC unless your investment income is $11,000 or less. If your investment income is more than $11,000, you can't claim the credit. Use Worksheet 1 in this chapter to figure your investment income.
Does Social Security count as income? ›
You must pay taxes on up to 85% of your Social Security benefits if you file a: Federal tax return as an “individual” and your “combined income” exceeds $25,000. Joint return, and you and your spouse have “combined income” of more than $32,000.
Is Social Security considered earned income? ›
Unearned Income is all income that is not earned such as Social Security benefits, pensions, State disability payments, unemployment benefits, interest income, dividends, and cash from friends and relatives. In-Kind Income is food, shelter, or both that you get for free or for less than its fair market value.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Why did I get $300 from the IRS today? ›
Under the American Rescue Plan, most eligible families received the first payment on July 15, and payments will continue each month for the rest of 2021. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.
What happens if you don't file your taxes but don't owe anything? ›
There's no penalty for failure to file if you're due a refund. However, you risk losing a refund altogether if you file a return or otherwise claim a refund after the statute of limitations has expired.
What happens if you dont have enough money to pay income tax? ›
If you find that you cannot pay the full amount by the filing deadline, you should file your return and pay as much as you can by the due date. To see if you qualify for an installment payment plan, attach a Form 9465, “Installment Agreement Request,” to the front of your tax return.
What happens if you don't pay enough income tax? ›
Underpayment penalties are typically 5% of the underpaid amount and they're capped at 25%. Underpaid taxes also accrue interest at a rate that the IRS sets quarterly.
Do I have to file taxes if I only worked 3 months? ›
There's no set time limit for you to work at a job and start claiming taxes. It all has to do with your income during the term of your employment.
