File taxes?

[imoldernu]

Don't laugh... Serious question.
Because of the way our retirement progressed, we have not had to pay state or federal taxes since 1992. Yes, we filed... both state and federal every year, and have always been under the taxable line. Often close, but always "under".

It looks as if we won't be owing taxes for this year, either. We are not required to file. The question is... should we file anyway? Downsides to not filing?

Looking ahead,probably one more year or two in this position, before we have to dip into deferred interest on bonds.

 

[jazz4cash]

Only thing I can think of is if you might decide to take out a loan it's a good way to document income. Assuming it a pretty easy return to prepare.

 

[pb4uski]

I used to do taxes for my grandmother and when she got to the point that she didn't pay taxes and didn't need to file I still did a return for her but we just didn't bother filing it... kept it for her records only.... it was helpful to document that there was no need to file for that year.

I can't think of any downsides to not filing... especially in your case where you have a number of consecutive years on file demonstrating that your income was low enough that you don't need to file. Are there any state government benefits that your get where eligibility is based on prior year income? like telephone or dental or property tax relief.

 

[frayne]

The only downside I could see is if Uncle Sam would come out with some type of gift that required a prior return to be filed as a matter of record. This happened during the Bush years while I was working at HR Block. I did the prior year returns pro bono so people could get their $600 or whatever it was back then.

 

[imoldernu]

I used to do taxes for my grandmother and when she got to the point that she didn't pay taxes and didn't need to file I still did a return for her but we just didn't bother filing it... kept it for her records only.... it was helpful to document that there was no need to file for that year.

I can't think of any downsides to not filing... especially in your case where you have a number of consecutive years on file demonstrating that your income was low enough that you don't need to file. Are there any state government benefits that your get where eligibility is based on prior year income? like telephone or dental or property tax relief.

OMG... Thank you!!!!

Yes!!!! About $2.5K in Senior Homestead exemption and IL senior assessment and tax freeze exemption. County needs copy of tax forms. In the early retirement years, because eligibility for prescription drug and medical, help, was based on income, but not net worth, we received a total of nearly 10k in assistance. That plan has long since been terminated, but it was great, and legal... while it lasted.

 

[SecondCor521]

I think you're past this point, but for others, filing an income tax return could be helpful for FAFSA / financial aid purposes.

Another reason might be if one has had taxes withheld and wants those withheld taxes refunded. Again, probably not your situation.

 

[Souschef]

Along with pb4uski's comments, in California there are reduced rates for water and power under the CARE program.