Q: Should I file a tax return even if my income is low?
A: Yes – in many cases, filing a tax return can put money back in your pocket even when income is relatively low.
Many people assume that if they didn’t earn much income, filing taxes isn’t worth the effort. But filing often unlocks refunds and tax benefits you can’t get unless you submit a return.
Here are several reasons why filing can still be valuable:
You may qualify for a refund of taxes already withheld. If taxes were withheld from paychecks during the year, filing a return allows you to recover overpayments.
You may qualify for valuable tax credits. Credits such as the Earned Income Tax Credit or Child Tax Credit can generate refunds even if you owe little or no tax.
Losses may benefit you in future years. In some cases – such as with business activity – a loss reported on a tax return may create a net operating loss that can help offset taxable income in future years.
You may still be able to claim refunds from prior years. If you believe you overpaid taxes in the past, you can generally amend returns going back three years. For example, refunds related to the 2022 tax year typically must be claimed by April 15, 2026, and may include interest from the IRS.
The bottom line: In many cases, taxpayers are not required to file if their income is below the standard deduction for their filing status. Filing a return can still unlock refunds, tax credits and future tax benefits, though. In other words, even when filing isn’t required, it may still be the easiest way to claim money that’s already yours.
Send questions about your taxes to Vincent Hicks, a CPA based in Cambridge who has more than 20 years of experience, at [email protected]. You can call Hicks at (859) 553-0788.