Many people file taxes because they are legally required to do so. However, even if you are not required to file, sometimes it can be in your best interest to do so anyways. Additionally, this year some new rules have been added regarding those who are required to file. Therefore, we put together a post that gives you six good reasons to file a tax return.
1. General filing Rules – Usually, the amount of your income, filing status, and your age determine whether or not you have to file taxes. For example, a single 28 year old would only be required to file if they made at least $10,150. However, there are special rules for those who are self-employed or dependents of another person. If you are unsure if you need to file it is suggested that you visit IRS.gov/filing.
2. Premium Tax Credit – If you purchased health insurance via the Health Insurance Marketplace in 2015, you may qualify for the new Premium Tax Credit. This means that in order to claim the credit you have to file a federal return. Additionally, if you purchased Marketplace coverage in 2015 and had the advance payments of the premium tax credit sent directly to your insurer, you also have to file a federal tax return. You can reconcile any advance payments with the allowable Premium Tax Credit. You should receive a Form 1095 A by the first week of February. This form will contain the information that you need to file taxes.
3. Tax Withheld or Paid – If you made estimated tax payments, had money withheld from your paycheck, or overpaid in taxes last year to have it applied to this year’s tax return, you have to file taxes. You may be entitled to a tax refund and you don’t want to give Uncle Sam any free money do you?
4. Earned Income Tax Credit – Did you earn less than $52,427 from working last year? If so, you can receive the EITC as a tax refund even if you don’t have children. This could be worth up to $6,143. If you qualify, make sure you file taxes so you can get this credit.
5. Additional Child Tax Credit – If you have a least one child that qualifies for the Child Tax Credit and cannot use the entire amount to lower your tax bill, you may qualify for the Additional Child Tax Credit. However, in order to get this credit you have to file your taxes.
6. American Opportunity Credit – The AOTC is available for four years of post-secondary education and it can amount to up to $2,500. To claim the credit you or your dependent must be a student that was enrolled for at least half of the time for one academic period. You may be able to claim this even if you don’t owe taxes. However, you have to file a federal tax return and use Form 8863.
If you are still unsure if you need to file taxes check out the instructions for forms 1040, 1040A or 1040EZ, to see income tax filing requirements. The IRS also has an Interactive Tax Assistant tool that is very helpful. If you found this article to be useful to you, please share it on social media so it can help others.