In Rev. Proc. 2022-12, the IRS has prescribed procedures for individuals who are not otherwise required to file a federal income tax return for 2021 to do so to claim, if eligible, the child tax credit (CTC), the recovery rebate credit (RRC), and/or the earned income tax credit (EITC).
Most taxpayers are not required to file a return when their adjusted gross income (AGI) is below their applicable standard deduction amount (for 2021, if not a dependent of another taxpayer, $12,550 for single filers or those married filing separately, $25,100 for those filing married filing jointly or as a qualifying widow(er), or $18,800 for heads of household, with additional amounts for taxpayers of all filing statuses who are over 65 and/or blind).
However, in many cases, a taxpayer not required to file may benefit from doing so, such as to obtain a refund of taxes withheld from wages or, as provided in this revenue procedure, to receive refundable credit amounts to which the taxpayer is entitled.
The revenue procedure covers three types of taxpayers not required to file a return: (1) those who had zero AGI for 2021; (2) those whose AGI was less than the applicable standard deduction and who were not eligible for, or do not wish to claim, the EITC; and (3) those whose AGI was less than the applicable standard deduction and who had earned income for purposes of the EITC (and wish to claim it).
Zero AGI procedure
Taxpayers with no AGI may have trouble filing a return electronically, since tax software usually expects some amount of it. The revenue procedure gives them a workaround: In addition to all other information required to be entered on Form 1040, U.S. Individual Income Tax Return (or Form 1040-SR, U.S. Tax Return for Seniors, or Form 1040-NR, U.S. Nonresident Alien Income Tax Return), the taxpayer must enter $1 as taxable interest on line 2b, $1 as total income on line 9, and $1 as AGI on line 11.
Filers whose AGI for 2021 was less than the applicable standard deduction and who are claiming the CTC and/or RRC but not the EITC may file electronically or with a paper return. These taxpayers must write "Rev. Proc. 2022-12" above the printed material on the top of page 1 of the return. (Whether or how they can do this on an electronic return is not specified.)
They must also provide other information, leave certain lines blank, and may provide certain other items of information, all as specified in the revenue procedure. Those claiming a CTC must include information about the dependents for whom the CTC is claimed. They may request direct deposit of the refund but may not split it between accounts. These procedures apply to returns filed after April 18, 2022.
Filers with AGI less than the applicable standard deduction and who are claiming any of the credits, including the EITC, may also submit the return electronically or on paper. These are taxpayers who have earned income but no other income that must be reported on line 1. They must also write "Rev. Proc. 2022-12" above the printed material at the top of page 1 and provide certain specified information, including about dependents for whom the EITC (and CTC, if applicable) is claimed, leave certain lines blank, and optionally provide other information. They must enter $0 as taxable income.
If they have EITC qualifying children, they must also include or attach Schedule EIC, Earned Income Credit, with information about those children. They may not use 2019 earned income to calculate the credit, a special rule otherwise available for 2021. These taxpayers also may request direct deposit of the refund but may not split it between accounts. These procedures also apply to returns filed on or after April 18, 2022.
All the methods require filers, as with all returns, to sign the return under penalties of perjury. Those who have been assigned an identity protection personal identification number for 2021 must use it. A "simplified return" under the procedures for CTC/RRC or CTC/RRC/ETC claimants is a federal income tax return for all purposes.
— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.