Tax season raises many questions, one of which might be, “If you have no income, can you get a tax refund?” On the surface, the answer may seem to be a straightforward ‘no’. After all, tax refunds generally result from having overpaid income taxes during the year. If there’s no income, there’s no income tax to refund. However, the U.S. tax system is complex, and there are some circumstances where a person with no income might still be eligible for a tax refund.
The U.S. tax system includes various refundable tax credits. A tax credit reduces your tax liability, and if a tax credit is refundable, it means you can receive a refund even if you owe no income tax or the credit is more than the amount you owe.
Some of these refundable tax credits include:
- Earned Income Tax Credit (EITC): The EITC is a benefit for working people with low to moderate income. It reduces the amount of tax you owe and may provide a refund. However, to qualify for the EITC, you must have earned income from working for someone or from running or owning a business or farm. Therefore, while you might have a low income, you can’t have no income.
- Child Tax Credit (CTC): The CTC offers up to $3,000 per qualifying child between ages 6 and 17, and $3,600 per child under age 6. The Child Tax Credit is fully refundable, meaning you could receive a refund even if you have no income. However, please check current tax laws as these amounts and rules may change.
- American Opportunity Tax Credit (AOTC): The AOTC is a credit for qualified education expenses paid for an eligible student during the first four years of higher education. If the credit brings your tax to zero, up to 40% of any remaining amount of the credit (up to $1,000) can be refunded to you.
No Income, But Had Taxes Withheld
There might also be a situation where you didn’t have any income for the current tax year, but you had a job in the previous tax year, and your employer withheld taxes on your paycheck. If you didn’t receive a refund for the previous year’s income taxes, you could potentially file a tax return for the current year to claim a refund of those withheld taxes.
If you’re married and filing jointly, your spouse’s income will be considered jointly with yours, which means you might receive a refund based on your combined income, credits, and deductions, even if you personally had no income for the tax year.
While it’s less common, there are scenarios in which someone with no income could receive a tax refund, typically due to refundable tax credits or previously withheld taxes. However, everyone’s tax situation is unique, and the rules for tax credits and refunds are subject to change. Therefore, it’s always recommended to consult with a tax professional or use a reputable tax software program to understand your individual tax situation better and ensure you’re receiving any refunds or credits to which you’re entitled.