Tax returns can be a time consuming task to complete. However, choosing not to file tax returns can be equivalent of throwing money away. The IRS tax code is constantly changing and provides various tax breaks and refunds to individuals that having a difficult time in making ends meet. Tax deductions and exemptions may exist that some taxpayers are not even aware of when they fail to file their tax returns.
Here are some tax refunds that some taxpayers may be missing out on:
- Earned Income Tax Credit (EITC) – if your income was less than a certain amount, you may be eligible for a tax refund to help boost your income
- Additional Child Tax Credit – if you do not receive the full Child Tax Credit, you may be eligible for Additional Child Tax Credit if you have at least one eligible child
- American Opportunity Credit – provides a credit of a maximum of $2,500 and the first four years of postsecondary education can qualify
- Making Work Pay Credit – If you earned income for work, you may be eligible for $800 for a joint return and $400 for an individual return
- Federal Income Tax Withheld – if you overpaid for taxes through the year or if the IRS withheld too much from your paychecks, you may be eligible for a tax return
- First-Time Homebuyer Credit – you must have bought a home before April 30, 2010, you may be eligible for a credit of $8,000 or $4,000 for individuals that file married filing separately
Tax refunds can only be received for up to three years after the tax return due date. After three years, the tax refund will be unobtainable by the taxpayer. By filing tax returns, a taxpayer can claim deductions and exemptions and receive an IRS refund within the three year time limit. There is no failure to file tax penalty for taxpayers that are owed an IRS refund. .
There are other reasons for taxpayers to file IRS tax returns. Some mortgage lenders and creditors may require copies of completed tax returns. The government will also deny access to their other programs if tax returns are not filed. Student loans and government jobs are also not accessible for individuals with outstanding tax returns.