How to File Taxes With No Income & Why You Should Do It

The question, ‘How do I file taxes with no income?’ often comes up whenever a taxpayer has not received any income within the year or earns less than the Internal Revenue Service’s income threshold.

You can file taxes with no income by using Form 1040 or the IRS's Free File program if your income does not meet the minimum requirements for the standard deduction.

Key Takeaways

• To answer the question, ‘How do I file taxes with no income?’ you can do so by filing Form 1040 to report your individual returns and calculate the amount of taxes you owe.
• The income requirements for filing taxes are based on the taxpayer’s age, filing status, and average income. It is subject to change every year due to inflation.
• Filing taxes with no income is a must because it helps you determine tax credits and deductions that you may be eligible to claim.

What Are the Income Requirements for Filing Taxes?

The income requirements for filing taxes vary depending on whether you are a regular employee or self-employed. The Internal Revenue Service also uses taxpayers’ filing status and age to determine their income thresholds.

You’re required to file taxes or pay self-employment tax if you are self-employed and earn at least $400 in net income. Meanwhile, the table below lists the tax filing income thresholds based on your filing status and age:

Keep in mind that the IRS’ income requirements are subject to change every year to account for inflation.

Who Can File Taxes With No Income?

Taxpayers in low-income households, students and parents looking to qualify for federal student assistance, older adults receiving Social Security benefits, and unemployed individuals can file taxes with no income.

Filing taxes for low-income households is essential because it provides the IRS with proper documentation for assessing their eligibility for the Earned Income Tax Credit and other tax benefits.

The IRS needs reliable documentation that verifies a taxpayer’s income and also demonstrates their full compliance with their tax obligations.

Meanwhile, unemployed individuals can also file taxes despite not having a stable or regular job. Since unemployment benefits are taxable, according to the IRS, taxpayers who’ve been displaced from their jobs can withhold federal and state taxes from their unemployment income.

5 Crucial Reasons Why You Should File Taxes Without Any Income

You are not required to file a return if you do not have any income to report in the first place. But, by choosing not to file, you are also setting yourself up for a possible IRS investigation and depriving yourself of possible stimulus payments.

Below are five crucial reasons that will help you understand better the importance of filing your taxes despite not receiving any income or not earning much for the tax year:

#1. To Claim Refunds

If you earn less than the income thresholds and make estimated tax payments, it is advisable to file a return in case you qualify for a tax refund. Once the IRS finds that your income is significantly less than any of the established income thresholds, you can possibly get most of the taxes you paid back.

You might also be wondering whether you can file taxes with no income to get stimulus checks or payments. The answer is yes, since stimulus payments do not have a minimum income requirement for taxpayers to qualify.

Stimulus payments, or checks, are direct payments made to eligible individuals by the government as a form of assistance amid economic crises and financial difficulties.

#2. To Earn Social Security Credits

Social Security taxes are part of the FICA (Federal Insurance Contributions Act) taxes that employers, employees, and self-employed individuals must pay.

For the 2024 tax year, you must earn at least $1,730 if you are a regular employee or self-employed to receive 1 Social Security credit. Each taxpayer can earn a maximum of four credits each year.

You must still file taxes even with no income, even if you did not receive any earnings or only earned a small amount of money, to ensure you have complete and updated records of your earnings and taxes. Consequently, you boost your chances of claiming Social Security credits.

You can also check Social Security’s guide to get more information on how you can earn Social Security credits.

#3. To Prevent Future Audits

People often assume that there are no consequences for non-filers or taxpayers with no taxable income if they choose not to file their taxes. Unfortunately, the assumption is one of the many tax myths that can leave you facing a possible IRS audit.

Not filing your taxes or reporting your earnings for even a single tax year could create discrepancies in your tax records and affect your eligibility for certain tax credits.

Let’s say you were recently unemployed, received a Form 1099-G, Certain Government Payments, and did not report unemployment benefits you received on Line 7 of your Schedule 1 (Form 1040).

Your unreported unemployment income could trigger an audit since the IRS system is programmed to compare information from your 1099, Schedule C, or W-2 forms with the earnings you declare on your tax return.

Similarly, if you generate money mainly from self-employment income and fail to consistently report your earnings every tax year, the IRS may question the gaps in your earnings and paid taxes.

#4. To Qualify For Tax Credits and Tax Relief

Perhaps you are a parent struggling to earn a stable and higher income, and you may have asked questions such as:

• How do I file taxes with no income and qualify for Child Tax Credit?
• How do I file taxes with no income but with a child or dependent?

Fortunately, you can still file your returns to claim the Child Tax Credit. Eligibility for Child Tax Credit (CTC) includes meeting specific income thresholds based on your filing status.

Parents who belong to low-income families or whose income barely meets any of the set thresholds may qualify for the refundable percentage of the CTC.

To qualify, you must either earn at least $2500 or have at least three qualifying children or dependents.

Aside from parents, self-employed individuals who experienced significant losses while operating their business or business owners looking to claim deductions to reduce their taxable income should also consider filing a tax return.

#5. To Monitor Your Financial Health More Closely

While filing taxes with no income may seem like a small, trivial task to do, in reality, it helps create a solid foundation for rebuilding your finances. By continuing to fulfill your tax-paying duties and responsibilities, you avoid incurring possible penalties and raising suspicion with the IRS.

Also, filing your taxes every year enables you to stay up-to-date with the amount of taxes you owe. It will also be easier for you to budget your income and settle your balances as soon as you find a more stable and higher-paying job.

How to File Taxes With No Income in 5 Easy Steps

Knowing how to file taxes with no income enables you to keep track of your taxes and have a clearer idea of which tax credits or benefits would be most beneficial to you.

The following are the essential steps to keep in mind when filing your tax returns with low or zero earnings:

#1. Gather the Necessary Documents

Some of the necessary documents you’ll need to file your taxes with zero income include copies of your last pay stub to serve as your basis in determining the amount of taxes typically withheld from your income.

If needed, use online tools such as Paystub.org’s paystub generator to recreate your income statements from your last employment or track client payments from your freelancing gigs.

Other essential documents and forms that may come in handy include Form 1099-INT and Form 1099-DIV if you received payments within the year in the form of interest, income or dividends.

If you’re filing taxes with no income as a student, furnish a Form 1098-T, Tuition Statement to report your qualified tuition expenses and other relevant education expenses.

#2. Fill Out IRS Form 1040 With the Correct Schedules

The next thing you must focus on if you want to know how to file taxes with no income is which IRS forms to use. In this case, you’ll be using Form 1040 to file your individual income tax return, claim tax credits and deductions, and determine the total taxes that you owe for the year.

Keep in mind that you must attach the relevant schedules depending on whether you are filing as an individual taxpayer or a small business owner.

For instance, sole proprietors must attach Schedule C, Profit or Loss From Business, to report financial losses and gains and claim deductions they may qualify for based on their annual business expenses.

#3. File Your Taxes Electronically

It is more suitable to file your taxes electronically while you’re under a financial strain. Filing taxes online is faster and more accurate, especially if you do so with the IRS Free File or any reliable tax filing software available.

With the IRS’ paperless filing, taxpayers can take advantage of the free tax preparation software. They can also digitally submit all supporting documents for their returns, including non-tax forms, correspondence, and notice responses.

Another IRS tool that may come in handy when managing your taxes is called Where’s My Refund? and it lets you check the status of your tax refund.

#4. File for a Tax Extension

If you need more time to gather all the necessary documents to file your taxes, consider filing for a tax extension to avoid getting penalized by the IRS. In 2024, the deadline for filing taxes was April 15, 2024.

However, you can still fulfill your tax obligations until October 15, 2024, provided that you fulfill Form 4868, Automatic Extension of Time to File U.S. Individual Income Tax Return. You must also contact and inform the IRS in advance by dialing 800-829-3676.

#5. Review & Submit the Form

Take time to review all the information on your tax forms as well as the supporting documents that you attach with your returns.

You can seek the help of a tax professional or a certified accountant if you need more guidance in figuring out which tax benefits would suit your current financial standing.

3 Mistakes to Avoid When Filing Taxes With No Income

As you navigate the steps in filing your taxes with no income, be mindful not to commit any of the following tax preparation mistakes:

#1. Filing Prematurely

While filing taxes late is frowned upon by the IRS, it is also not ideal to file prematurely particularly if you have not gathered all the necessary forms and documents to report your income and file your returns.

As such, you may incur mistakes in calculating the taxes you owe or assessing the credits and tax refunds you can claim later on. To avoid this, make it a habit to mark your calendar with the correct tax filing deadlines each year.

#2. Inputting Incorrect Information

Whether it’s misspelling your name, inputting the wrong Social Security Number, or missing any other important values when reporting your income, these mistakes could lead to more serious errors in assessing your tax liabilities and tax deduction eligibility.

Using thewrong filing status is also a common tax filing mistake for taxpayers who were either recently married, widowed, separated, or divorced from their spouse or switched from married filing jointly to filing separately.

You must review every form or document that you need to submit to the IRS before submitting them and ensure that all details you provide are 100% accurate and up-to-date.

#3. Failing To Report All Income Gains And Losses

When filing taxes with no income or earnings that barely meet any of the income thresholds, it is important to report all information about your current financial status.

If you’re a sole proprietor or a business owner, make it a point to enumerate all profits and losses that your business encountered throughout the year.

Similarly, if the majority of your earnings for the year are from unemployment benefits, interest income, dividends, miscellaneous payments, or freelancing work, you must clarify and explain all income sources on your tax return.

The more concise the details you provide on your returns, the more easily the IRS can gauge your circumstances and provide the necessary assistance so you can figure out how to pay your taxes accordingly.

Final Thoughts

Now that you know the answer to the question, ‘How do I file taxes with no income?’ you must aim to ensure your tax return reflects your current finances, whether you are still receiving any form of income or not.

After all, filing your returns is not just about paying your taxes. It is also a way for you to inform the federal and state governments of your current circumstances, income- or work-wise. In turn, they can assist you in finding viable solutions to keep you from incurring penalties or owing tax debt.