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- Can I Get a Tax Refund if No Fed Taxes Were Taken out of My Paycheck During the Year?
- Can Someone Who Hasn't Worked Get a Tax Refund?
Tax refunds are a matter of relatively basic math. You calculate your tax bill, then subtract tax payments you made during the year, either through income withholding or by paying estimated quarterly taxes. If you paid more than you owe, the Internal Revenue Service returns the balance to you. It's sometimes possible to get a refund even if you didn't pay in anything, but it depends on a variety of factors.
As of 2013, the IRS requires 1099 forms for 17 different types of income. Most taxpayers only have to worry about a few of them. For example, Form 1099-B reports securities and futures transactions. Form 1099-DIV is for dividends and capital gains distributions. Form 1099-MISC is the one of the most common. It reports income earned by sole proprietors and independent contractors, as well as royalties and rents received.
Paying Estimated Taxes
If you work for someone as an employee -- that is, if you receive a W-2 from him instead of a 1099, your employer withholds taxes from your paychecks on your behalf. If you have only 1099 sources of income, however, the IRS expects you to pay your taxes yourself on a regular basis. You must take an educated guess at what you think your business or investments will earn for the year, then calculate your taxes based on that and send the IRS quarterly payments. Exceptions exist if you don't think you’re going to owe more than $1,000, or if you had no tax liability the previous year. You can also opt out of making estimated payments if you choose, but if you do, you might owe penalties in addition to taxes at the end of the year.
The penalty for not making estimated quarterly payments can be as much as 8 percent, and this is assuming you pay your taxes by April 15. If you're late, additional penalties and interest apply. It's possible that you won’t owe anything, however, if your 1099 income is minimal enough that you're able to write it off through the use of exemptions, deductions and non-refundable tax credits. When this is the case – or even if you've just managed to erase most of your tax bill – it's possible that you might get a refund if you're eligible for any refundable credits.
As of the 2012 tax year, the IRS offers three refundable or partially refunable tax credits: the Earned Income Credit, the American Opportunity Credit, and the Additional Child Tax Credit. If you're eligible for any of these, the end result is that after you figure out what you owe the IRS, if the credit or credits are more than what you owe, you'll receive a check from the IRS for the difference. Therefore, even if you paid nothing in toward taxes during the year, you'd receive a refund. Non-refundable credits don't work the same way. These credits can eliminate your tax bill, but if there's anything left over, the IRS keeps the difference. Refundable credits are usually reserved for low- to middle-income earners. For example, in 2013, your adjusted gross income must be less than $51,567 to qualify for the Earned Income Credit, and this is if you're married, filing jointly, and have three or more children.
- TurboTax: Penalties for Not Filing a 1099-MISC IRS Form
- IRS: A Guide to Information Returns
- Nolo: Paying Estimated Taxes
- TurboTax: What is the Difference Between a Refundable and Non-Refundable Credit?
- IRS: Form 1040 (PDF)
- IRS: Preview of 2013 EITC Income Limits, Maximum Credit Amounts and Tax Law Updates
- Forbes: You Can Get $10,000 Per Child in College Tax Credits, Thanks to the Fiscal Cliff Deal