Not Required to File a Tax Return? You May Be Missing Out on Sizeable Tax Credit Refunds

Article highlights :

• Filing Status Thresholds for 2024.

• Why File a Tax Return?

• EITC (Earned Income Tax Credit)

• CTC (Child Tax Credit)

• Unfiled returns for previous years.

Many people may discover that they earn less than the income limits required to submit a federal income tax return. Even if you are not obliged to file, doing so might be helpful. This article will look at the filing criteria for 2024, the possible advantages of filing a tax return even if it isn't necessary, and the refundable credits available, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

Filing Thresholds for 2024

The filing thresholds for 2024 vary by filing status, age, and kind of income. Here are some broad thresholds:

o For single filers under 65, the income requirement is $14,600. It costs $16,550 for people over the age of 65.

 o  Married couples under 65 filing jointly have a $29,200 income threshold. If one couple is 65 or older, the cost is      $30,750; if both are 65 or older, it is $32,300.

o Married Filing Separately: The $5 threshold applies regardless of age.

 o The Head of Household threshold for people under 65 is $21,900. It costs $23,850 for anyone over the age of 65.

 o The threshold for surviving spouses with dependent children under 65 is $29,200. It costs $30,750 for anyone over the age of 65. This status only applies for the first and second years after the death of the spouse.

These levels are subject to change depending on inflation adjustments and IRS updates, so always check the most recent data when filing your taxes.

Why File a Tax Return Anyway?

Even if your income is less than these limits, filing a tax return might be beneficial. What's the reason? You may be eligible for refundable tax credits, which might result in a refund even if you owe no taxes.

• The Earned Income Tax Credit (EITC) helps low- to moderate-income workers get a sizable return.

• The Child Tax Credit (CTC) may give significant financial help for families with children.

• State advantages may necessitate filing both a state and federal tax return.

Earned Income Tax Credit (EITC)

The EITC is a refundable tax credit designed to benefit low- to moderate-income workers. It may drastically lower the amount of tax owing and perhaps result in a refund.

Earned income comprises wages, salaries, tips, and other taxable employee compensation. It also covers net earnings from self-employment and some disability benefits. It excludes income from pensions, unemployment payments, and Social Security.

The amount of the EITC depends on your income, filing status, and the number of eligible children. For 2024, the maximum credit amounts are roughly:

o No children   Up to $632.

o Up to $4,213 for one child and $6,960 for two.

 o Three or more children: Up to $7,830.

To qualify, you must have earned money, a valid Social Security number, and have filed a tax return. As income rises, the credit amount diminishes and eventually disappears.

Child Tax Credit (CTC)

The Child Tax Credit is an additional beneficial benefit for families. It gives financial assistance to every qualified kid under the age of 17.

• For 2024, the kid Tax Credit (CTC) is up to $2,000 per qualified kid. Up to $1,700 of this money is refundable, which means you may get it back even if you don't owe any taxes.

• To qualify, a kid must fulfill age, relationship, residence, and support requirements. The kid must be under 17 at the end of the tax year, related to you, living with you for more than half of the year, and providing less than half of their own support.

• Higher-income workers will see a phase-out of the CTC. For 2024, the phase-out starts at $200,000 for solo taxpayers and $400,000 for married couples filing jointly. The credit is lowered by $50 for every $1,000 of income exceeding these limits.

Filing a tax return, even if it is not required, might benefit persons whose income falls below the filing level. By filing, you may be eligible for key refundable credits such as the Earned Income Tax Credit and the Child Tax Credit, which may give substantial financial assistance. Understanding these credits and filing levels will help you make more educated choices and perhaps earn a return that will improve your financial situation.

If you were not obliged to and did not submit returns in the past, tax years 2021, 2022, and 2023 remain open, and returns for those years may still be filed to claim refundable credits. However, the statue of limitations for submitting the 2021 return for a refund ends after April 15, 2025.

Contact this office to find out how you might profit from filing and to get help preparing your current or previous returns.