Extenuating Circumstances

• Taxpayers who experienced a hardship during the tax year are often allowed to waive their filing obligations. Many taxpayers who have had their lives disrupted by circumstances beyond their control are not penalized for late filings or late payments. Examples of extenuating circumstances include incarceration, illness and military deployment.
  
  

Filing Requirements

• If you don't meet the income tax filing requirements, then you are not required to file a return. For tax year 2010, taxpayers are required to file a tax return if they are single and their gross income exceeds $9,350, $18,700 for those who are married and file jointly, $3,650 if married and file separately, $12,050 for heads of household and $15,050 for qualifying widows or widowers. Taxpayers over age 65 are allowed a slightly higher income limit before they are required to file. These seniors are not required to file unless their gross income was at least $10,750 if single, $13,450 if head of household, $20,900 if married and filing jointly or $16,150 if a qualifying widow(er). The income limit for those married and filing separately is $3,650, which is the same for taxpayers at any age.
  
  

Considerations

• The only reason a taxpayer should file a return if she doesn't meet the requirement to file is to be refunded any federal tax withheld from wages during the tax year or to take advantage of refundable credits. The main benefit of refundable credits -- as opposed to nonrefundable credits -- is that refundable credits can garner a refund in excess of the federal tax paid during the tax year. For example, it is conceivable that a taxpayer could pay $2,000 in federal tax during the tax year and receive a $3,000 refund.
  
  

Dependents

• You are considered a dependent if someone else can claim you on their income tax return. For example, if your parents -- or anyone else -- qualifies to claim you on their tax return, you cannot claim your own exemption because your exemption belongs to that filer. Although many dependents do not file a return, you can still file a return even if you are a dependent, but your will enter zero in the area designated for exemptions instead of one.