John Roska: On when you can skip the tax return
Q: When is it OK to not file a tax return? I hear people say they didn't earn enough to file. I'd prefer not to file, since when I do, my refund just goes to repay a student loan.
A:You don't have to file if you don't owe any tax. That usually happens when you don't have much income.
But if you don't owe tax, but taxes were withheld from your pay, you'd be entitled to a refund. You lose that refund if you don't file.
Even if your refund gets zapped to repay a debt, you might as well file and get the credit. If you don't, Uncle Sam just keeps the money without paying down your debt.
The IRS basically says you don't have to file a tax return if your taxable income, after taking all your deductions, would be zero. Then, you'd owe no tax, and the government is very happy to keep any refund they'd owe you if you did file a return.
For example, there's $760 million due 918,000 people who didn't file returns for 2010 in 2011. The 4-year limit for filing late to claim those refunds expires April 15. (There's no penalty for filing late if you don't owe tax.)
The income limits for not filing vary according to your age and filing status. The limits are a little higher if you're 65 and older, so that seniors can earn a little more before they're required to file. The filing requirements for the State of Illinois are almost identical.
The return you file by April 15 is for the 2013 tax year. For 2013, if you're single and under 65, the income limit before you must file is $10,000. If you're single, and over 65, the limit is $11,500.
If you're married, and file jointly, and both spouses are under 65, the limit is $20,000. If one spouse is 65, the limit's $21,200. If both spouses are at least 65, the limit's $22,400.
Even if your income is below these limits, you still have to file if you owe certain special taxes, got advance payments on your Earned Income Tax Credit (EITC), or netted more than $400 from self-employment.
Not filing may save you some paperwork, but it will forfeit any refund you're entitled to, since filing is the only way to get a refund (or the EITC).
Federal tax refunds can be intercepted to repay federal debts. But only for federal debts, and only if you file a tax return. If you don't file, Uncle Sam simply keeps your refund. It's not credited to your debt.
Better to file, then, and have your lost refund reduce your debt, than just lose it. That way, at least some day you could start getting your refunds again.
But if you prefer, it's possible to reduce or stop the withholding of federal tax from your pay, so that you don't have to file to claim a refund of your overpaid federal tax. File a W-4 form with your employer. If you didn't owe tax for 2013, and your 2014 income will be less than the above filing limits, you could be exempt from withholding altogether.
John Roska is a lawyer with Land of Lincoln Legal Assistance Foundation. You can send your questions to The Law Q&A, 302 N. First St., Champaign, IL 61820. Questions may be edited for space.