5 Reasons to File a Tax Return Even If You Don’t Owe Taxes

Believe it or not, many people don’t have enough income after tax deductions to owe federal income taxes.

The Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction amounts — not to mention that those amounts increase regularly to account for inflation — and taxpayers who make less than their standard deduction typically don’t owe taxes. According to an analysis by the Tax Policy Center, 40% of households were expected to owe no taxes for the 2022 tax year.

However, just because you don’t owe taxes doesn’t necessarily mean you shouldn’t file a tax return. There are several situations in which it literally pays to file a return anyway.

Read on for a look at some of the most common reasons why someone who owes no taxes could benefit from filing a federal income tax return.

How to tell if you are required to file

Now that you know many households don’t owe federal income taxes, you might be wondering how to tell if you do.

Whether the IRS requires you to file a return depends on a few factors, including your income, tax-filing status and eligibility for certain tax breaks. Check out the IRS “Filing Requirements Chart for Most Taxpayers” to get a rough idea or use the agency’s free Interactive Tax Assistant tool for a more specific answer based on your situation.

But again, even if you aren’t required to file a return, you still should do so if a situation like one of the following applies to you.

1. Your employer withheld income taxes

Even if you did not make enough money to owe taxes, your employer could have withheld income taxes from your paycheck. Check out box 2 on your Form W-2 for any federal income tax withheld. If you do not owe taxes but there is a dollar amount in that box, filing a tax return will net you a refund of that amount.

In other words, if it turns out you didn’t earn enough income to owe taxes, Uncle Sam owes you your federal withholding back. But you must file a return to get it.

This situation is very common with teenagers and young adults who work part-time but are still being claimed as dependents by a parent or guardian.

2. You qualify for the earned income tax credit

The earned income tax credit is currently for workers who are ages 25 through 64 and have low or moderate income. It’s especially valuable for taxpayers with dependent children — up to $7,430 for the 2023 tax year, depending on how many qualifying dependents they have and how much income they earned.

The earned income tax credit is also refundable, meaning that it could not just lower your tax bill but also net you a tax refund — even if you don’t owe taxes. So if you qualify for this credit, you will probably want to file a return even if you aren’t required to do so.

3. You qualify for the child tax credit

The child tax credit is another refundable credit. So it can reduce your tax liability to zero and, if any credit remains after reducing your liability, it can be refunded to you.

For the 2023 tax year, for which your return is due in April 2024, this credit is worth up to $2,000. Of that, $1,600 is refundable.

4. You qualify for the American opportunity tax credit

During their first four years of college, students and their parents might be eligible for this partially refundable tax credit. The American opportunity tax credit is worth up to $2,500, with up to $1,000 of that being refundable. So even if you don’t have a tax liability, you could get a tax refund of up to $1,000 if you’re eligible for the credit.

5. Income verification purposes

Many federal, state and other government assistance programs require a tax return for income verification. For example, some seniors may receive a property tax deduction or reduction in homeowners’ association fees if they are able to show proof of income below a certain amount.

A tax return filed for informational purposes only is often known as a “zero-dollar return.”