Soon after the 2016 Presidential elections, several famous individuals who did not support the eventual winner, Donald Trump, voiced their protests.
Golden Globe Award-winning actress Mia Farrow and activist Gloria Steinem are among who outwardly voiced their protests.
However, there was something unique about the way they protested Trump’s election. According to an article carried by the business magazine of Time the duo had pledged to withhold tax payments to the Federal Government in opposition to the then newly elected President.
The two protested against the election victory, claiming that it should have been considered illegitimate because Trump lost the popular vote.
Also, they were against a number of Trump-led policies including the cause of the current government shut-down, the Mexican Wall.
Every American citizen has the right to invoke the First Amendment and withhold from paying taxes due to religious or moral beliefs.
However, Uncle Sam has won that argument dozens of times by disputing if the First Amendment provides the right to refuse to pay income tax simply because the taxes are used to finance programs the taxpayer is opposed to.
Nevertheless, there are a few circumstances when you don’t have to file taxes.
Only when you’ve not hit the income threshold, or you are under the threshold age or have special filing status, can you get away without filing taxes.
Nevertheless, in all three circumstances, tax experts still say that it is better to file a return than not to file.
So, if you are wondering, “can I file taxes without working?” The answer is a simple yes.
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We’ve listed some of the fundamental tax filing requirements for your 2018 return and what considerations you ought to weigh when filing even if you were not working.
How much did you make last year? What was your gross income? The IRS describes gross income as “all facets of income you received in the previous year in the form of money, goods, property, and services that is not exempt from tax.”
Gross income is different from earned income. It includes all items under earned income including salaries and wages; commissions and bonuses; net business income; and certain taxable fringe benefits.
Gross income also covers other facets such as investment income, retirement income, Social Security Benefits, Unemployment payments as well as alimony and child support payments.
Therefore, it is clear that not working does not qualify anyone from not filing taxes. However, if your gross income for 2018 falls below Uncle Sam’s minimum threshold, you don’t have to file a tax return.
The minimum may be different according to various criteria which include your age and filing status. Status is dependent on whether you are single or married; joint spouse filing or separate filing and whether you are a legit dependent.
Also, the IRS adjusts the minimum amount of income from year to year to cater for inflation. Therefore, the minimum income threshold keeps rising.
If you have no “earned income” or your earned income was low, your “gross income” could still qualify you as eligible to file taxes. However, if you have no income at all – which is rather hard to come by – you are not obligated to file taxes.
Your concern shouldn’t be taxes but rather how you can make at least $ 500 this month.
IRS rules Regarding your Age
In most cases, the term working age is used to refer to individuals of adult age and engaged in meaningful economic activity that has monetary rewards. The IRS also defines different tax return thresholds for citizens according to age clusters.
Singles, under 65 are required to file taxes as long as their income exceeds $ 12,000. However, if you are single and over 65, the threshold slightly increases to $ 13,600.
Married citizens who are under 65, the gross income has to be more than $ 24,000 (for both spouses) and if they are over 65, it has to be higher than $ 26,600 for joint filings.
For couples who file separately, there is no age distinction. They must file taxes on all their income.
With regard to age, your tax liability is calculated depending on how old you were at the end of last year. Meaning, if you turned 65 in December of 2018, Uncle Sam will consider you to have been 65 the entire year.
In the same way, if you turned 18 in December, you will be considered to have been 18 throughout the year.
However, the IRS has a special one day grace period for those born on new years’ day. If you turned 65 on January 1st, 2019, the IRS would still consider you to have been 65 in 2018.
Therefore, whether in the active “working age” or retired, everyone can (should) file taxes even when they are not working.
Dependents and Filing of Taxes
Uncle Sam also has a different set of special rules that govern tax filing for dependents who earn an income. Generally, all dependents must file their taxes and make payments for any taxes due.
So, if you were not working because you were a “dependent” this rule puts to rest the question “Can I file taxes without working?”
However, the IRS varies the amount threshold depending on the type of income a dependent has earned or unearned.
In the dependents category, earned income includes salaries, wages or tips, taxable scholarships, and fellowship grants.
Unearned income includes proceeds from investments such as interests, dividends, capital gains, unemployment benefits, and some trust distributions.
Income from self-employment ventures is also regarded as taxable. It doesn’t matter whether you are a teenager making dollars from running a neighborhood lawn service, or a freelance entrepreneur with a 10-person virtual operation.
All the net proceeds that you gain from the venture contribute towards determining whether you are eligible to file a return. Furthermore, it doesn’t matter whether it was your sole source of income or a part-time hustle to boost your pay; it counts.
If your annual gross income from self-employment exceeds the threshold in your respective status, you have to do a little extra. You’ll need to fill a Form 1040 and Schedule C or Schedule C-EZ which captures and reports your self-employment earnings.
Also, the IRS requires you to file a Schedule SE to pay self-employment tax. That is if your net earnings from self-employment exceed $400.
I am not Working, Do I Have to File Taxes? — Additional Considerations
Although you may have not been working in the year 2018 or your gross income may have not hit the threshold, it is still beneficial for you to file taxes.
This is especially so for individuals who don’t earn much but could be eligible for one or more of the refundable tax credits.
You could be eligible for earned income tax credit, the child tax credit, or the American Opportunity tax credit. But you won’t know it or access these benefits unless you file a tax return to calculate how much is due to you.
Your tax return will also be your channel to claim the credits and to request a refund from Uncle Sam. So, the obvious answer to, “Can I file taxes without working?” Is an affirmative Yes!
Here’s a description of some of these credits.
Refund of withheld income taxes – If at some point in the course of 2018 you received a payment that had income tax withheld, you could be eligible for a refund of the amount withheld.
But you can only access it if you file your taxes.
When you’re eligible to claim a refundable credit (which is higher than your total tax liability) Uncle Sam will gladly send you the balance of the money.
However, you could qualify for a nonrefundable tax credit. That is, if the refundable tax credit due to you is less than your federal income tax liability, it’ll be used to reduce your total tax liability.
In other words, the IRS keeps the money and uses it to settle part of taxes due from you.
The earned income tax credit (EITC) is available to eligible married tax-paying couples with children (as well as individuals) in low-wage jobs. In 2018, the figure increases to $6,431 for married couples. But you must file a joint return and have at least three children.
The American Opportunity Credit is an educational credit meant to cushion college expenses. It was refundable in the 2017 tax filing return and is also refundable in the 2018 tax year returns.
It is meant to refund 40 percent of college expenses, but the refund portion is capped at $1,000 and the credit covers only the first four years of post-secondary education. Also, eligible citizens must be enrolled at least as part-time students.
Lastly, Filing Taxes as a Precaution- Even if you were not working and perhaps didn’t make any income in 2018, you may want to make your returns simply as a precaution.
Why? You may ask
Uncle Sam is not as invincible as much as we may think he is. The IRS operates under certain time limits, and these may work for you.
They are called statutes of limitation. Just as the IRS has a time limit for issuing tax refunds, it also caps the time for conducting audits, and for recovering taxes, it thinks someone might owe.
If you have been making accurate tax returns, in most cases Uncle Sam can only go back three years into your records. However, this clock starts ticking when you file your taxes.If you don’t file your taxes, the IRS can dig as far back as it pleases when it conducts an audit.
So, it is recommended that you file your taxes, even if you didn’t work or earn last year; at least as a precaution.
If you are having challenges figuring out which forms or how to file the return, you don’t have to get human help. Simply check out TurboTax. However, if you really need to talk with someone reach out to experts who’ll guide you at the government-led Fresh Start Initiative.
What About the Protesters?
Experts at Fresh Start Initiative will show you that judges often have little tolerance for tax protestors. Most cases are ruled in favor of the IRS opening the doors for a wide range of stiff civil penalties.
So, go ahead and beat the Monday, April, 15 2019 deadline for filing your taxes.