It’s my annual “Taxes from A to Z” series! For the series, I’ll focus on terms that you might see on your tax forms and statements but not necessarily in the headlines. If you’re wondering whether you can claim wardrobe expenses or whether to deduct a capital loss, this is one series you won’t want to miss.
Z is for Zero Return.
Not every taxpayer has to file a tax return. You may not have enough reportable income or you may not otherwise meet the criteria.
(To find out whether you need to file in 2016, click here.)
Sometimes, taxpayers will file a return even when they don’t have to. This may be in order to claim a refund that’s owed to you, report health care coverage or tick a box for FATCA reporting. There may be other reasons, too, like starting the clock for the statute of limitations running (remember, the clock doesn’t start if you don’t file). When you file a return when you have no (or limited income) to report, this is sometimes referred to as a “zero return.”
Not all tax pros like to file a zero return – after all, you’re paying money for a return when you have no income to report – and still others worry that you’re unnecessarily making yourself vulnerable for an exam. That said, it’s important to consider everything at stake before deciding to not file – sometimes a zero return makes sense.
