Tax
Buddy - Are You Exempt From Filing Your Taxes?
In spite of the fact that many people earned
wages which were way below the tax filing requirement, they
still go ahead and file a 2005 Federal income tax return.
Such filings cost unnecessary expenses - in terms of time
and money (the processing cost). These expenses are born by
both the applicant as well as the government.
In wake of this information, the IRS is trying to reduce the
taxpayers’ burden and processing cost. The IRS has provided
a list of questions which would help you determine if you
are required to file a tax return or if you can stop the withholding
so you will not have to file an unnecessary return in the
future.
Sometime during the year, individuals do undertake a stand
alone or a couple of infrequent financial transactions which
may necessitate them to file a Federal Income Tax return.
We have listed below such examples as provided by IRS. The
following are some instances where you will need to file a
Federal Income Tax return for 2005:
• Your Federal taxes are withheld
from your pension and wages for this tax year and you wish
to get a refund.
• You are entitled to the Earned Income Tax Credit
or you have received Advance Earned Income Credit for this
tax year.
• You were self-employed and received earnings which
total more than $400.00.
• You sold your home.
• You owe any special tax on a qualified retirement
plan (including an individual retirement account (IRA) or
medical savings account (MSA). The different circumstance
when you may owe tax are:
o Received an early distribution from
a qualified plan
o Made excess contributions to your IRA or MSA
o Were born before July 1, 1933, and you did not take
the minimum required distribution from your qualified
retirement plan.
o Received a distribution in the excess of $160,000 from
a qualified retirement plan.
• You owe social security and Medicare
tax on tips you did not report to your employer?
• You owe uncollected social security and Medicare
or Railroad retirement (RRTA) tax on tips you reported to
your employer?
• The tax law gives special treatment to some kinds
of income and allows special deductions and credit for some
kinds of expenses. This called Alternative Minimum Tax (AMT)
and you are eligible for such treatments?
• You owe recapture tax.
• You are a church employee with income in wages of
$108.28 or more from a church or qualified church-controlled
organization that is exempt from employer social security
or Medicare taxes.
If any of the above-mentioned situations
are applicable to you then you will most likely need to file
a Federal Income Tax return. It would be prudent on your part
to a file a return even if you do not have to, as it may allow
you get a refund of any Federal Income Tax that might have
been withheld.
