4 Tax Filing No Income Scenarios in 2023

The tax filing no income scenarios will bring good reasons to consider filing a tax return for 2022 and earlier years, even if you’re legally not bound to file a tax return. It is natural to refrain from unnecessarily indulging in a lengthy and complex tax filing procedure, and nobody enjoys that! But there are cases when it will significantly benefit you and The IRS if you file a tax return. This post brings to five such tax filing no income situations.

Tax filing no income scenario1-Claim Refundable Tax Credits

Many tax credits are “refundable” in nature. Refundable tax credits are significant because even if you have no tax liability, such credits will come to your bank as a refund. For example, the Earned Income Tax Credit (EITC) ,the Additional Child Tax Credit (ACTC) and American Opportunity tax credit which are refundable tax credits . See this IRS page to understand EITC, ACTC, and AOTC.

Even if you do not have any taxable income, you can get this money in the form of refundable tax credit by simply claiming those refundable credits by filing the tax return. Most people who believe in no tax filing, no income thoughts miss out on these tax refunds because of non-filing of IRS tax returns.

Tax filing no income scenario 2 – Tax Withheld

IRS requires employers to deduct the tax on wages/salaries, and the threshold for deducting the tax at source is relatively low. Law requires even the household employers to withhold tax on payments made to house hold employees like Nanny Jobs or Cooks and Gardners hired to work at home. Or cases of students and part-time workers working with many contractors who, as employers, withhold taxes on wages paid to them.

In many cases, especially low earners, the basic standard deduction will make the tax liability zero. So, the tax withheld by the employers is refundable. It is wise for everyone to check their Form W4 and Form W2 that the employer issues. File a tax return and get back your money as refund by IRS.

Tax filing no income scenario 3 – Child Tax Credits for 2021

The government gave lots of relief during 2020 and 2021, for example. Child Tax Credit, which is not refundable tax credit for 2022, was a refundable tax credit for 2021. So, if you did not file a tax return in 2021, you missed out on claiming the child tax credits. But you can file a tax return and claim the child tax credit if eligible, by filing a tax return.

Tax filing no income scenario 4 – Claim Stimulus Checks

To provide relief during Covid 19 pandemic period, the government ordered IRS to distribute three stimulus check payments during 2020 and 2021. The basis for distributing the stimulus check was tax returns for 2020 and 2021.If you qualified for the first stimulus check but did not receive it, you must prepare and file a 2020 Tax Return and claim the Recovery Rebate Credit.

If, for any reason cannot claim these stimulus payments, now is the time. You can still claim these stimulus payments by filing a return for the years 2020 and 2021.

• Claim Stimulus 1 and/or 2 by filing 2020 Taxes by April 15, 2024
• Claim Stimulus 3 Check by filing a 2021 Return by April 15, 2025

Can you file late & still claim the refund?

If you have no tax liability, there can be no failure to file a penalty or pay a tax penalty.IRS process refund on the tax return filed within three years of its due date. For example, you can file tax returns pertaining to the tax years 2019, the year 2020, and 2021 in this tax season 2023 by the due date April 18 2023. So, if you have tax withheld or any refundable tax credits that you should have remembered to claim in these years, it is an excellent opportunity for you to file a tax return.

So, no tax filing, no income principle may some time is quite taxing !