Discussion:File Anyway?
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Discussion Forum Index --> Tax Questions --> File Anyway?
| 19 April 2006 | |
| A guy on my university residence hall who is a business major says that everyone should file a return even though they are not required. He says it might offer protection in the future. If someone has no income and they file is the return even considered valid? Does filing in this case have any benefits? | |
NeubergerIncomeTax (talk|edits) said: | 19 April 2006 |
| Good response Dennis :) (still laughing) | |
Towntaxlady1 (talk|edits) said: | 19 April 2006 |
| The only benefit I can see is to establish his residency in the USA. If he is a citizen, he should not have to prove he was domiciled here. Check out the IRS website..it informs taxpayers that they may not even be required to file (below the income limits)- they don't need more unnecessary paper. Since the recent Amnesty discussions on TV & radio, I have had two illegal aliens request that I file a return for them to establish their domicile. | |
| 19 April 2006 | |
| Generally speaking, if a person has no gross income, there isn't much reason to file. However, some states have refundable low income tax credits, so it might be worth while. Like Towntaxlady1 mentioned, filing tax returns can evidence one's intent to reside in a certain place. And some professionals recommend filing to start the statute of limitations. But filing takes time (gathering the right forms, etc) and some money in postage, and so forth. So if you really have no income or withholdings, and don't qualify for some type of credit, it's probably more hassle than it's worth. | |
| 19 April 2006 | |
| Always a "Maybe".
Lets say $ 8 000.00 loss in a new business for year 2, 005 Also, lets say that the taxpayer got a 1099 Misc for $ 1 500 in that year The guy does not need to file. But not doing will carry, First: 1- A Letter from the IRS 2- Problems in the future to get the capital loss discount. Am I right? | |
| 19 April 2006 | |
| I suspect the reason that he is saying to file is to start the statute of limitations which would not start if no tax return was filed. (3 years from the due date of the return or when the return was filed) But, if you truly have no gross income, why file? | |
| 23 April 2006 | |
| The only time I would recommend filing if the client didn't have a filing requirement for a particular year would be if they did have a filing requirement in prior years. Knowing how the IRS works, it's not a bad idea to have a zero tax return sitting there just so the IRS doesn't bug you years later. I've had several cases over the years where it was necessary to respond to IRS notices on behalf of clients that fell into the exact situation. They ended up spending more money responding to notices than if they had filed a return showing they had no filing requirement. | |
| 23 April 2006 | |
| Martineo;
The client got a 1099 misc, so he needs to file a tax return reporting this income. It may be under the threshold for reporting gross income, but ss tax is paid on the 1099; it is essentially a schedule c filer. And the loss of 8K also needs to be reported. This will offset the se tax on the 1500.00 but of course, to have this loss, the client must have had income over 1500.00. If not, he is in the wrong business to charge 1500.00 when it cost him 8K to do the job....imho that is :) | |
