If you don’t owe taxes, you aren’t required to file a tax return. However, just because you don’t have to file a tax return doesn’t mean that you shouldn’t file one. In fact, you might be missing out on money that the government owes you if you don’t file a tax return.
Unclaimed Refunds Total in the Hundreds of Millions
Recently, the IRS said that it has $760 million in unclaimed tax refunds for people who didn’t file returns in 2010. That’s not a bad chunk of change.
These are people who could have filled out a W-4 allowing for withholding from their paychecks, or who had made quarterly estimated payments. However, these were moves made automatically, and they didn’t really think about them. In the end, though, their income might not have been high enough to be required to file, so they didn’t.
In these cases, a refund of the withholdings is due — and maybe even more. Some of those who don’t file their tax returns also miss out on refundable tax credits, like the Earned Income Tax Credit (EITC).
For some families, the refund could total between $3,000 and $5,000. That’s not a bad deal for filling out a tax return.
You Have Three Years to Make Changes
For those who owe taxes, and don’t meet the income requirements to avoid filing, there is a penalty paid when you don’t pay. The failure to file a penalty is added to the interest and other penalties you might pay. However, there isn’t a penalty when you file a return that you didn’t have to file.
However, there is a time limit. You have three years to file a tax return. So, the 2010 tax return, which should have been filed in 2011, must be filed by April 15, 2014, if you expect to claim a refund that you might have waiting for you.
It’s also worth noting that you have three years to amend a return. If you discover that you should have taken another deduction on your 2010 taxes, or that you were eligible for a tax credit that year, you can amend your 2010 tax return to reflect that information and receive an additional refund, if you are eligible.
Another reason to make changes is if you are affected by the recent SCOTUS ruling on DOMA. If married filing jointly would have benefited your tax situation as a same-sex couple, and you were legally married in 2010, you can amend your return to reflect the filing status — and possibly see a refund.
It’s important to understand that three-year time limit. Once this year’s tax day passes, the 2010 tax season will be “officially” closed. You won’t be able to amend your 2010 tax return, and you won’t be able to file the tax return if the IRS owes you money. Take the time to look at your finances and consider your taxes. If you didn’t file in 2010, you might be pleasantly surprised to discover that you are owed money.