Is it possible to get a tax refund if you haven't paid any taxes?

Question

My friends husband is self-employed. He's only claiming like $15000. They have 2 children. They are confused because he didn't pay any federal taxes all year and are now getting a $2000 refund. How is this possible?

They had their taxes done at H & R Block.

Answer 1

On $15000 income and with two kids, they wouldn't owe any income tax, and the EIC would be a couple thousand dollars more than the self-employment tax he'd owe.

The downside - self-employment in an amount that just happens to maximize a refund due to EIC will probably get their return reviewed by the IRS. So if what he reported is true and honest, then they do have a refund of around that amount coming. But if his return has numbers on it that he can't prove, there could be trouble ahead..... you say "he's only claiming like $15,000 - if by that you're saying that's not a true amount for what he made, he could end up doing a lot of explaining to an IRS auditor and could end up not only losing the EIC for this year but for future years also.

Answer 2

The Earned Income Tax Credit can result in a refund even though there is no tax liability and no taxes were paid.

Answer 3

expensive Mc: Makes you flow HUH?? besides the undeniable fact that it truly is genuine and that i have seen many over the years lots larger. As I tell my youthful friends get a house and get some babies and that determination will bounce. this recommendation became prepared in line with our information of the tax regulation in result on the time it became written because it applies to the data that you presented. click on my profile to ascertain more suitable. Errol Quinn Enrolled Agent carry close Tax consultant

Answer 4

yep, EIC. those who get EIC have it down to a science. the max EIC applies when taxable income is about 11k to 16k, so those who get EIC will work under the table when they are getting close to 16k as the EIC starts to go down after 16k.