People should file annual tax returns with the IRS to receive refunds and avoid allegations of fraud, advises Business Insider. When a person fails to file a required tax return, the IRS automatically classifies this as tax fraud, which is a federal crime. While few individuals caught not filing taxes are ultimately jailed, offenders can face stiff financial penalties.
Legally, a person doesn't have to file an IRS tax return on income amounts below a specified threshold. These income limits vary depending on age and marital status. As of 2015, single people younger than 65 don't have to file unless they earned more than $10,000, according to Bankrate. In the same age bracket, married couples can collectively earn $20,300 before they must file. Filing an income tax return is often advisable even if it isn't mandatory. People must file a return for any year they earned $400 or more in self-employment income.
Delinquent taxpayers must pay separate penalties for failure to file a return and failure to pay owed taxes, the IRS advises. Even if they make too little to pay federal income tax per se, most people must file tax returns to receive refunds for withheld payroll taxes. Each taxpayer has a three-year window to file for and receive refunds.