The Internal Revenue Service generally doesn’t require you to file a tax return unless your income exceeds the threshold for your filing status. This doesn’t mean, however, that the IRS won’t accept a return that reports no income. In fact, you might even get a tax refund when filing without any income if you’re eligible to take one of the refundable tax credits.
Claiming Refundable Tax Credits with No Income
Federal tax credits reduce the amount of tax you owe for the year on a dollar-for-dollar basis. Some credits are nonrefundable, meaning they can reduce your tax bill to zero but they don’t allow for refunds of excess unused credits.
Fully refundable credits include the premium tax credit that subsidizes the plans you purchase through the Health Insurance Marketplace, the additional child tax credit, the American opportunity credit that offsets taxes for school expenses, and the earned income credit. Unfortunately, you’re not eligible for the EIC if you don’t have income to report.
Tax law treats these credits as tax payments that can be refunded when the amount exceeds your tax bill, which presumably is zero if you're filing taxes with no income. You might want to evaluate your eligibility to claim one or more of these credits before deciding not to file taxes this year.
Other Reasons to File with No Income
In most cases, the IRS cannot audit a tax return more than three years after the date the return was filed or its original due date, whichever is later. The original due date is April 15 for most taxpayers. Filing your tax return – even with no income to report – gets that three-year period running. If you don't file, the IRS can audit you at any time because no event triggered the start of that three-year period. The deadline is open-ended. If you didn't file a return when you should have, such as because you had unearned income that you overlooked, the IRS can come back to look into the matter at any time.
In the event that you did earn some wages during the year but not enough to require filing taxes, – meaning that you had income but not taxable income – the only way you can claim a refund of the taxes your employer withheld is to file a tax return.
How to Report Zero Income
You have three tax forms to choose from when filing: the 1040, 1040A or the 1040EZ. You can file on the 1040EZ when you're reporting little or no income. It's the shortest and simplest of the three forms to prepare. But if you plan on claiming a refundable tax credit other than the earned income credit, you’ll need to file on the 1040 or the 1040A. The 1040A is shorter than the 1040 but longer than the 1040EZ.
Regardless of the form you choose, you’ll enter zeros in both the income and adjusted gross income, or AGI, sections of the return. You can take the standard deduction and exemptions you’re entitled to claim despite the fact you have no income to offset. When it comes time to figuring out your refundable credits, you may need to calculate them on separate forms that must be filed with your return.