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Whether or not you're employed at the end of the year doesn't affect whether you can file a federal income tax return. In fact, even though you don't have a job, you might still be required to file a return because your taxable income exceeds the filing thresholds. Alternatively, you might want to file a return to get a refund.
Taxable Income While Unemployed
Just because you're unemployed doesn't mean you don't have any taxable income for the year. If you worked at all during the year, your wages still count as taxable income even though you're out of a job for part of the year. Even if you didn't work, you might still have taxable income from interest payments, selling stocks or other property at a profit, or taking distributions from your retirement plans. Even receiving unemployment benefits counts as taxable income.
If your gross income exceeds the threshold for your filing status, you must file a federal tax return even though you're unemployed. The filing thresholds increase if you are over 65 and vary from year to year with inflation. For the 2012 tax year, if you're single and under 65, you must to file a return if your gross income exceeds $9,750. If you're married filing jointly, and both spouses are under 65, you must file if your gross income exceeds $19,500. For example, say you're single and under 65. If you have $10,000 in unemployment benefits, you must file a return even if you don't have any other income.
Refunding Tax Withholding
If you only worked for a small portion of the year, you might be entitled to a refund of the money withheld from your paycheck. The only way to get the money back is to file a tax return. For example, say you made $5,000 in January and had $1,000 withheld, but haven't had any other taxable income the rest of the year. Even though your gross income for the year is below the filing threshold, you should file a return to get the $1,000 back.
Even if you only have a small amount of taxable income, you may be eligible for refundable tax credits, such as the earned income credit. To qualify for the EIC, you need earned income though, so you would have had to work at least part of the year. Unearned income, like unemployment payments and interest income, won't qualify. If you're in college, you might also qualify for the American Opportunity Credit, which allows a refund of up to 40 percent of the credit.
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