Having trouble deciding if you should file a 2015 tax return?
Many people dread filing their tax return each year; so much so that they put it off until they convince themselves that it isn’t even really necessary. Tread carefully when making this decision. Below are five reasons that you may want to file a return this year…even be excited to (imagine that!).
1. You are not a rule-breaker.
Not sure if you want to or even need to file a tax return at all for 2015? Generally speaking, there are three main factors, according to the IRS, that determine whether or not you need to file. These are your:
- filing status
For example, if you are under 65 years old, single and earned over $10,300 in 2015, you fall within the IRS guidelines to file a tax return.
2. You have health insurance.
Did you enroll in health insurance through the Health Insurance Marketplace for 2015? Well you may be eligible for the Premium Tax Credit. Of course, you can only actually claim the credit if you file a tax return. If you had advance payments of the Premium Tax Credit sent directly to your health insurer in 2015, than you’ll want to file a federal tax return. Any of these advance payments will be reconciled and essentially paid back to you with the credit. Keep an eye out for your Form 1095-A which will be mailed to you by early February. This is a statement from the Health Insurance Marketplace that will make it a whole lot easier to report the necessary information needed when filing your tax return.
3. You want your refund.
When you really break it down, there are only two reasons that any of us would ever file a tax return – it’s the law or we want our refund! Some may try and run from the law but why run from money?
If your employer withheld federal tax from your paychecks or you made estimated quarterly payments, the IRS could owe you. You can only collect it if you file a tax return for the year though. And even if you planned to put it off for another year, keep in mind that your refund expired in three years. Once those three years are up, you can still file with no penalty for doing so but you’ll lose out on claiming that refund. Why give up your own hard earned money (since that is essentially what it is) to the IRS just because you couldn’t find a few minutes to prepare your tax return?
4. You have kids.
Are you claiming your children as dependents this year? If you’ve been doing this for awhile, you probably already know that you knock off a couple (thousand) bucks from your taxable income for this. In fact, the amount has increased from $3,950 per child in 2014 to $4,000 per child in 2015. But did you know you also might be eligible for a Child Tax Credit? Whereas claiming dependents reduces your taxable income, a credit will actually reduce your tax bill directly, dollar-for-dollar. So if you receive a $1,000 credit, you are knocking off $1,000 directly from your tax bill. Can you say… #WORTHIT?
You might also be eligible for the Earned Income Tax Credit. Many people think that they have to have kids to claim this but that’s not necessarily true. Much prefaced by it’s name, the Earned Income Tax Credit is based more on income earned for the year than anything else.
5. You’re enrolled in college.
Thought you had to avoid that pile of debt that’s been building up while you’re away at school, didn’t ya? Think again. You might be eligible for something called the American Opportunity Tax Credit which will reduce your taxable income up to $2,500 per year. Before getting too excited, let’s take a look at the eligibility requirements. The student must meet all of the following to qualify:
- student must be pursuing a degree or other recognized education credential
- student must be enrolled at least half time for no less than one academic period at the start of the tax year
- student must not have finished the first four years of higher education at the start of the tax year
- student must not have claimed the AOTC of the former Hope credit for more than four tax years
- student must not have a felony drug conviction at the end of the tax year
The income limits to qualify for either the full credit or reduced credit amount are as follows:
- To claim the full credit, your modified adjusted gross income (which is equal to the AGI for most) must equal $80,000 or less ($106,000 or less for married filing jointly).
- To claim a reduced credit amount, your modified adjusted gross income must be over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
Filing a 2015 tax return is ultimately your choice.
As with anything in life, the decision lies in your hands. However, not filing a tax return can really limit you in some cases. Especially when you are at a time in your life when you plan to buy a house, enroll in college, or even get married and begin filing a joint return (yes…your tax situation WILL become your partners tax situation if you file jointly). Give our tax team a call if you’re still unsure. We’ll be glad to help! And if you DO decide to file a 2015 tax return, you can create an account and get started now!