Do I need to file even if I don’t owe any taxes? That is a question we hear a lot. Even if you make under $10,000 and are not required to, we still think it’s a good idea to go ahead and file. There are circumstances where you may need to prove that you weren’t required to file. Reporting your income on your tax return is the only way to prove that. If you wait until after the fact the lawyer fees and other associated costs will far outweigh the cost of filing your return originally.
Those who are on Social Security and do not owe any tax should file as well. As Benjamin Franklin once said, “An ounce of prevention is worth a pound of cure.” While nobody is safe from the threat of an audit, your chances greatly increase if the IRS thinks you have unreported income. Also consider that the tax laws are constantly changing, so what worked for you last year might not work this year. Take for example the 2000 page Budget Bill loaded with new tax changes. If you never file then you always miss out on any deductions or exemptions you never knew you had. Not reviewing all of your options is always a big mistake.
Lastly, we urge anyone that lives or makes money offshore to always file. Even if you are under the minimum limit you are required to file special forms to the IRS. Failure to do this can result in a civil penalty of $10,000 or more. It is never safe to assume that you don’t have to file and you cannot use the excuse that you received “bad information” from your tax professional. That’s why it is so important to choose a financial firm like us that always stays up-to-date on all of the latest laws.