Paperwork and keeping records are chores that demand a lot of time but offer little gratification, unless a lawsuit or other legal challenge comes up. This gives credence to the old mandate: document, document, document. Still, there are times when all of this processing seems a superfluous and colossal waste of time.
One example of this is when your accountant's calculations show you breaking even with the Internal Revenue Service (IRS). Neither owing money nor getting a refund, is there any purpose in filing at all? Why should anyone file if there is nothing to be gained or lost?
Tax Filing and the Law
In fact, federal law does allow certain groups of people to go without filing. If your income in a given year, for instance, is lower than the standard deduction allowed for your age and filing status, you need not file a return that year.
Worth noting is that standard deductions are higher for the aged and certain disabled categories. Additionally, if Social Security payments are the only source of income, filing is unnecessary. On the other hand, Social Security is taxable if combined with other revenue sources.
Read More: Is a Social Security Check Taxable?
The Net-Zero Tax Return
How often is the case where money is neither due and payable to the IRS nor disbursed to the taxpayer as a refund? Not very often, if the past is any indicator.
According to a recent survey, no more than seven to eight percent of filing households paid exactly what they owed in the prior year, neither overpaying nor taking out too little. The majority of filing Americans get a refund, largely because employers err on the side of withholding too much. Needless to say, the net-zero return is a rarity among the filing public.
The Necessity of Filing
This all begs the question: do you have to file if you don't owe taxes or expect a refund? Other than the designated demographics named above, most households must file annually with the IRS. In the end, it is the government, not its citizens, that decides whether or not you have met your obligation with regard to income tax.
Your tax return is a starting point where you make the case for owing, or receiving back, a certain sum of money. The agency, though, hears the case through the scrutiny of its analysts, deciding whether your argument prevails or not. So, even if Form 1040 shows nothing due and nothing coming, the IRS reserves the right, by statute, to confirm this fact or dispute it.
Filing On Time or Late
Yet, you ask, if I don't owe taxes, can I file late? After all, the government is not losing any money. By law, taxes are to be filed by the 15th day of the fourth month after the prior year ends, hence April 15th. Should that date fall on a weekend or holiday, the due date advances to the next business day.
Although you may ask for an extension to file, such grace is never granted simply because, by your estimation, you owe nothing. Remember, the IRS is the final arbiter (excluding any court action on the taxpayer's part) of what you paid over the previous year.
What Happens After the Fact?
You might wonder, "I didn't file taxes but I don't owe." Unless you qualify among the exempt, you should take immediate action to file. If a refund is yours to get, there is no penalty for filing late.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.