Why You Should File a Tax Return Even if You Normally Don’t Have to

Dear Friends,

It might come as a surprise to learn that not everyone who receives income is required to report it to the government.  It depends upon your filing status and the total amount of income you received last year. 

For instance, according to the IRS, “a married couple both under age 65 generally is not required to file until their joint income reaches $17,500” (note the operative term in the previous sentence: generally).   Regardless of the amount of money you receive from other sources, if you are self-employed you must file a federal tax return when your income from self-employment hits $400.  Click here to figure out if you need to file a tax return.

While not going through the hassle of filling out a tax return might sound attractive, there are several important reasons why filing--whether you need to or not--is important, especially this year.

That’s because under the economic stimulus package recently signed into law, the IRS will be sending checks to 130 million taxpayers. But they can’t send you a check if they don’t know who you are. If you qualify, you could get back the entire amount you paid in federal income tax for 2007!

Those who file as “single” are eligible to receive up to $600 and those filing as “married/joint” could get a check as large as $1,200. The information on your 2007 tax return will be used to calculate the size of your payment. 

Even if you don’t owe any federal income tax, perhaps because your gross income was less than the threshold amount(1) or because you received income that isn’t taxable (Social Security, veterans, or certain railroad retirement benefits) you are still eligible to receive a check. If you had at least $3,000 of qualifying income in 2007 and are a single taxpayer, your stimulus payment will be $300; those who file a joint return will receive $600.

The IRS has just issued a special version of form 1040A that “highlights the simple, specific sections of the return that can be filled out by people in these categories to qualify for a stimulus payment.”

Not everyone will be getting a tax rebate. The size of the check starts to get phased out once your income hits either $75,000 (single taxpayer) or $150,000 (married/joint). For every dollar over these amounts, your check is reduced by 5%.

While the stimulus checks are a this-year-only deal, there are a number of tax credits available every year that can mean getting a payment from Uncle Sam even if you have little or zero tax liability.

One of the most commonly overlooked tax credit is the Earned Income Tax Credit [EITC] for low-income workers. Other tax benefits include the Additional Child Tax Credit, the Health Coverage Tax Credit, and the Credit for Elderly or Disabled.

But in all of these cases, you’ve got to file a tax return to get a check.  In addition, you and anyone you are claiming as a dependent must have a valid Social Security number.

The IRS is warning people to watch out for scams related to the tax rebate.  Don’t be doped  by phone calls or e-mails requesting personal data such as your Social Security number or bank account information in order for you to receive your tax rebate.  The IRS never uses either of these methods to request this kind of information. 

Filing a 2007 income tax return is the only thing you need to do to receive your stimulus check. In May the Treasury Department will start sending them automatically to those who are eligible. Keep in mind that if you move before your check arrives, be sure to notify the IRS of your new address.

More information about the stimulus plan can be found on the IRS Web site in the “Frequently Asked Questions” section.

Hope this helps,
Gail

Sourc          Source: IRS Publication 17, Your Federal Income Tax

 1. Who Must File a Federal Income Tax Return