This free tax tool may find ‘overlooked’ credits or refunds for those who don’t need to file, IRS says

If you don’t file your taxes, you may be leaving money on the table — and there’s a free option to make the process easier.

Generally, you’re not required to file a federal tax return if your gross income is below the standard deduction, which is $12,950 for single filers and $25,900 for married couples filing together for 2022.

But there can be benefits to filing even if you don’t have to. Most taxpayers, including this group, qualify for IRS Free File, which offers free online guided tax prep for federal returns and some state filings, to possibly claim “overlooked tax credits or refunds,” according to the IRS.

You can use IRS Free File if your 2022 adjusted gross income was $73,000 or less, and taxpayers at any income level can use it to file an extension. Roughly 70% of taxpayers qualify for Free File, but only 2% used it during the 2022 filing season, according to the National Taxpayer Advocate.

“We frequently see students, part-time workers and others with little income overlook filing a tax return and never realize they may be owed a refund,” IRS Commissioner Danny Werfel said in a statement this week.

With no taxes due, lower earners may wrongly assume they’re not eligible for a refund, the IRS said. However, they may still qualify for “refundable” tax credits, which can be claimed without a balance, such as the earned income tax credit for low- to moderate-income workers.

There are currently unclaimed refunds from 2019 worth almost $1.5 billion, the agency reported.

To get started with Free File, you’ll need personal information like your Social Security number, dependent and spouse details, last year’s adjusted gross income for verification and the necessary tax forms.

Before starting the filing process, you can compare providers or use the IRS lookup tool to find the best software match, based on your income, location and other factors.  

“It’s a good option for those who have simple returns, don’t need ongoing tax planning advice and could benefit financially from the free service,” said certified financial planner Judy Brown at SC&H Group in the Washington and Baltimore area. She is also a certified public accountant.

However, with several tax law changes over the past few years, some filers may prefer to work with a tax professional.