LEARNING CENTER
Maximize Refunds: The Importance of Filing Taxes Even When Not Required
As a general rule, filing a tax return is mandatory for individuals whose earnings surpass the standard deduction aligned with their filing status. However, those not obligated to file can still uncover significant financial advantages by doing so. Missing out on crucial refundable tax credits and utilizing carryover benefits are just a few potential perks.
The chart below depicts the minimum income thresholds necessitating a tax return for the 2025 tax year, due in 2026:
2025 INDIVIDUAL INCOME TAX RETURN FILING THRESHOLDS |
||
FILING STATUS |
UNDER AGE 65 |
AGE 65 OR OLDER |
Single |
$15,750 |
$17,750 |
Head of Household |
$23,625 |
$25,625 |
Married, Filing Jointly |
$31,500 (both spouses under 65) |
$33,100 (one spouse 65+) |
Married, Filing Separately |
$5 (any age) |
$5 (any age) |
Qualifying Surviving Spouse |
$31,500 |
$33,100 |
Additional Filing Needs - Even if your income is beneath standard limits, filing could still be necessary. Considerations include:
Self-employment earnings of $400 or greater.
Ongoing obligations for special taxes like the Alternative Minimum Tax.
Receipt of health insurance Premium Tax Credits.
Church-related income totaling $108.28 or above.
Unresolved Social Security or Medicare taxes.
Obligated household employment taxes.
Distributions from a Health Savings Account (HSA) by you or your spouse.
Dependent Tax Filing - If claimed by another taxpayer, dependents have distinct filing criteria:
Unearned income more than $1,350.
Earned income exceeding $15,750.
Gross income over the greater value of $1,350 or amassed earned income plus $450 (maximum limited by the standard deduction).
Potential Opportunities Foregone by Not Filing: Opting out of filing can result in the disregard of significant monetary inflows. Here are pertinent examples:
Tax Withholding Refunds – A portion of wages is often withheld for federal tax purposes. This amount is fully reclaimable if no tax return is due.
A tax credit directly reduces the tax owed. Some credits only cover existing liabilities but others, if refundable, allow for returns above tax liabilities, benefiting non-required filers who might access these.Earned Income Tax Credit (EITC) – This refundable credit aids lower-income earners, potentially resulting in up to $8,046 refunds in 2025. Eligibility considers income, filing status, and qualifying children, making it prudent for eligible earners to file.
Child Tax Credit (CTC) - Offers a $2,200 per child credit with up to $1,700 refundable, which could benefit those not compelled to file.
American Opportunity Tax Credit (AOTC) – Rewards eligible students with up to $2,500 annually for educational expenses. Up to 40% is refundable, providing a potential $1,000 net gain without a tax liability.
If educational fees are paid by a non-filer like a grandparent, the filer is seen as eligible for credit by default.Premium Tax Credit - Designed to lower insurance purchase costs via the Health Insurance Marketplace.
Making the Most of Carryover Deductions - Even when not mandated to file, unclaimed deductions require imminent use to roll over and aid in future tax scenarios or refunds:
Net Operating Losses (NOLs): Prior net losses from business activities can have up to 20-year carryforward eligibility.
Charitable Contributions: Excess in donations beyond yearly limits rolls over up to five successive years.
Passive Activity Losses: Deficit from rentals or passive activities might offset impending passive earnings.
Capital Losses: Surplus losses over gains can extend into subsequent tax years to counterbalance future profits or regular income streams.
Other Considerations
State Program Eligibility: Federal filings often influence local tax obligations and access to state resources.
Future Financial Preparedness: Continuously filed returns ease long-term financial processes, like securing loans or mortgages.
Identity Security: Proper submissions help block unauthorized usage of your tax identity.
Countless individuals miss potentially substantial refunds by bypassing the opportunity to claim refundable credits from the IRS. Seek professional assistance from this office to determine if filing could benefit you, even retroactively, to redeem past eligible returns.
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