Do I Have to File Taxes? -- Three Reasons Why You Probably Should

With so many people unemployed or under employed this past year, many are wondering if filing a tax return will even be necessary. While it is true that you don't have to file if your income drops beneath a certain limit, not filing could cost you money.

So, what exactly are the income limits? Here is the 2009 rundown:

$9.350 if Single
$10,750 if 65 or older
$12,000 for Head of Household
$13,400 if 65 or older
$18,700 for Married Filing Jointly
$19,800 (one spouse) $20,900 (both spouses) if over 65
$3,650 if Married Filing Separately
$15,050 Widow with dependent child
$16,150 if 65 or older
$400 if self employed

If your gross income falls below these income limits, filing is not necessary. However, there are three very good reasons why filing a tax return anyway might still be a good idea.

Reason #1: To receive a refund of the federal taxes withheld. If federal taxes were withheld from your paycheck this year or part of last years refund was applied to this year's taxes, you will not be refunded this money unless a tax return is filed.

Reason #2: Could be missing be missing out on tax credits. Individuals who try to prepare their own taxes are not always aware of current tax credits, and amazingly there are quite a few of them. These credits include things like the earned income credit, the additional child care credit, educational credits, a "Making Work Pay" credit and others.

If you file but forget to ask for an eligible credit, the IRS will most likely catch it and include it with the refund. But if you don't file, then you won't get the credits at all.

Reason #3: To prove your income. There are certain situations in which you may have to provide proof of your income, and sometimes a tax return is all there is to work with. For low income individuals, many need based programs seem to require copies of last year's tax return as proof of income. These may include utility assistance, education assistance, medical assistance, weatherization programs and others. And if you are self employed, those tax returns will be required if applying for a personal or home loan.

While it is true that not everyone has to file a tax return, don't automatically assume that this applies to you. By not filing, you could be walking away from money you are entitled to.

Can't afford tax prep assistance? The IRS Volunteer Income Tax Assistance (VITA) program is there to help low income tax filers. The number to call is 1-800-906-9887. For seniors 60 years and old, the Tax Counseling for the Elderly (TCE) program provides free tax counseling and assistance in filing returns. For more information, about TCE, call 1-800-829-1040.

resources:
http://www.irs.gov/individuals/article/0,,id=107626,00.html http://www.irs.gov/newsroom/article/0,,id=105097,00.html
http://www.irs.gov/individuals/article/0,,id=96623,00.html
http://www.mydollarplan.com/money-file-taxes/.