Doing your taxes, even if you don’t have a filing requirement, is essential to getting tax credits that you wouldn’t get otherwise, D.C.’s taxpayers advocate said.
Currently in D.C., about 30% of taxpayers who qualify for the Earned Income Tax Credit don’t take advantage of it because they don’t file a tax return, according to Paul Smith, the city’s taxpayer advocate.
“Some taxpayers think that if they don’t have a filing requirement, then they should not file a tax return,” Smith said. “Even if they don’t have a filing requirement, they may still want to file in order to get some of these powerful credits that actually can put cash in their pocket.”
Broadly, Smith recommended using resources that are available to simplify the filing process. He said there’s an IRS program, Volunteer Income Tax Assistance Program, that allows people to work with volunteer tax preparers trained and certified by the IRS to put returns together for free.
“There are many resources out there for taxpayers to have that done at no cost,” Smith said.
In D.C., the city has a website where taxpayers can file their D.C. tax return for free using the digital platform. Smith said the website has information about filing requirements, and he suggested taxpayers review the IRS website for additional guidance.
Taxpayers should make sure their returns are prepared properly, Smith said, and that they’re maximizing the credits they qualify for. Smith said there’s “a federal earned income tax credit and there is also a D.C. Earned Income Tax Credit.”
With regard to when to file, Smith said the sooner, the better, especially if a taxpayer is expecting a refund.
“As we progress through the filing season, more returns are submitted, and that process of getting refunds out the door slows down a little bit just because of volume,” Smith said.
Even if a taxpayer owes money, they should file on time to avoid a failure to file penalty, he said.
Some people are reluctant to file their taxes because, “they’re worried about what could happen after the return is filed.”
However, Smith said, “If you do file a return, and if that return is audited, as long as everything on the return was done according to the law, you have nothing to worry about. Provide the documentation that is requested, and it’s usually then a very fast and easy process to actually finish the audit.”
More information about resources for D.C. taxpayers is available online.
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