Filing a 2020 Tax Return, Even if You Don’t Have to, Could Put Money in Your Pocket

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While people with income under a certain amount aren't required to file a tax return because they won't owe any tax, if you qualify for certain tax credits or already paid some federal income tax, the IRS might owe you a refund that you can only get by filing a return.

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By David Alito
CL-21-16, May 14, 2021

As the Deputy Commissioner of Wage & Investment, it’s important to me that my organization ensures that everyone can claim the tax credits they’re eligible for, whether it’s a tax refund, a stimulus payment or federal withholding credits.

Before I talk about 2020 tax returns, I do want to mention that IRS employees are hard at work to process some of last year’s returns that we weren’t able to get to because of the many office closures during the pandemic. It’s important that you file your 2020 tax return even if your 2019 tax return hasn’t been processed yet. We will still process your 2019 return even if you’ve already gotten your 2020 tax refund.

Why you should consider filing a tax return even if you’re not required to file

Filing a tax return is probably not something most people enjoy doing. So why would anyone want to file a tax return if they don't have to? Well, actually, there are some important reasons – you might get a tax refund and you may be eligible for an additional stimulus payment. If you’re eligible for future payments or credits, it helps if IRS has your 2020 tax return and direct deposit information on file.

While people with income under a certain amount aren't required to file a tax return because they won't owe any tax, if you qualify for certain tax credits or already paid some federal income tax, the IRS might owe you a refund that you can only get by filing a return. Some tax credits are "refundable" meaning that even if you don’t owe income tax, the IRS will issue you a refund if you’re eligible. Many people miss out on a tax refund simply because they don’t file an IRS tax return.

There are more reasons you may want to file, even if you don’t have to.  If you had federal taxes withheld by your employer, you may be eligible for a refund of those taxes. This includes students and part-time workers who may not file because they have too little income to require them to do so. You may also qualify for tax benefits like the Earned Income Tax Credit or the Child Tax Credit. If you have children, we highly encourage you to file your 2020 tax return as soon as possible to make sure you’re eligible for the appropriate amount of the Child Tax Credit, including the 2021 advance Child Tax Credit payments.

There is usually no penalty for failure to file if you are due a refund, but why miss out on money that’s rightfully yours? If, however, you wait too long to file your return and claim a refund, you risk losing it altogether. That’s because an original return claiming a refund must generally be filed within three years of its due date. If you haven’t filed a tax return for tax year 2017 and had any money withheld from your paychecks or are eligible for tax credits, you need to file by May 17, 2021. If you don’t, the money is forfeited, by law, and becomes property of the U.S. Treasury.

File a 2020 tax return if you’re missing stimulus payments and think you’re eligible for more money

I know many people have questions about tax law changes related to the American Rescue Plan Act of 2021. I urge you to start with IRS.gov – Coronavirus Tax Relief – to find  the most updated information when it’s available. If you’re looking for general information, the best place to start is IRS.gov. It will save you time because our employees won’t be able to provide much more information if you call.

Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits. That’s because people can get them even if they have little or no income, and even if they don’t usually file a tax return. This is true as long as you are not being claimed as a dependent by someone else and you have a Social Security number. When it comes to missing stimulus payments, it’s critical that you file a 2020 tax return even if you don’t usually file to provide information the IRS needs to send the payments for you, your eligible spouse and eligible dependents.
For anyone who missed out on the first two rounds of payments, it’s not too late. If you didn't get a first and second Economic Impact Payment or got less than the full amounts, you can get that missing money if you’re eligible for it, but you need to act. All first and second Economic Impact Payments have been sent out by IRS. If your 2019 tax return has not been processed yet, the IRS won’t send you the first or second payment when it is.

I’d like to clear up some confusion that we continue to hear about the Non-Filers: Enter Payment Info Here tool. This tool was developed to allow people to submit their information through the Free File system last year. The tool was available only on IRS.gov through late November 2020. This option is no longer available.

Filing a 2020 tax return is the only way, if you’re eligible, to get your money from the first or second payment now. You’ll claim the 2020 Recovery Rebate Credit. Most people who don’t usually file can use IRS Free File to provide very basic information about you and your family. There’s even a special section on IRS.gov that can help: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

When you answer the questions in Free File, you may also find that you’re eligible for other tax credits which may mean a bigger refund. The IRS will process your tax return once you’ve submitted it and issue your refund. This means you can expect two payments because the 2020 Recovery Rebate Credit is paid as part of your tax refund. After your refund is issued, if you’re eligible, you’ll get another payment shortly afterward for the third Economic Impact Payment.

An original return claiming a refund must generally be filed within three years of its due date. If you haven’t filed a tax return for tax year 2017 and had any money withheld from your paychecks or are eligible for tax credits, you need to file by May 17, 2021. If you don’t, the money is forfeited, by law, and becomes property of the U.S. Treasury.

Filing electronically and choosing direct deposit is the fastest way to get your refund and stimulus payments

If I could give you one important piece of advice for filing your taxes, it would be to file electronically and choose direct deposit for your refund. The best way to file a complete and accurate return is to file electronically. The tax software asks questions about your income, credits and deductions and will help figure your Recovery Rebate Credit. If you want your refund as soon as possible, filing electronically and having your refund sent via direct deposit is the fastest and safest way to receive your money.

If you don’t have a bank account, visit the FDIC website or the National Credit Union Association using their Credit Union Locator Tool for information on where to find a bank or credit union that can open an account online and how to choose the right account for you. If you are a veteran, see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

So, if you haven’t filed taxes recently because you thought you didn’t have to, I hope I’ve given you a closer look into why it might be a great idea to file in 2020. It’s something that can be done electronically using a smartphone. Plus, with our helpful online resources and free filing assistance for certain taxpayers, it’s easier than ever to file electronically and see if you’re due a refund. If you’ve already filed, thank you. Tell your friends and family so they don’t lose the money they’re entitled to – visit the filing information section of IRS.gov today!

David Alito
Deputy Commissioner, IRS Wage & Investment Division

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About the Author

David Alito is the Wage and Investment Division (W&I) Deputy Commissioner. In this role, he assists the W&I Commissioner in the oversight of all W&I organizations. The W&I Division employs approximately 37,000 employees and has responsibility for delivering customer service (including telephone and face-to-face assistance) and tax return processing for all of America's taxpayers as well as pre-refund compliance activities for W&I taxpayers. In addition, the W&I Division support organizations provide oversight of modernization and management of technology, strategic planning and direction, communications, and strategic human capital management, ensuring safety and security and critical infrastructure, formulation, and execution of the budget, and advancing equal opportunities for employees.

 

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