In Part I, we looked at the scenarios where you would be exempt from filing an income tax return, as well as some common exceptions to the general rule. Now we will look at some reasons why you probably should file an income a tax return, even if you have the legal right not to do so.

Claiming a Refund for Income Tax Withheld: If you worked during the year and had federal and/or state income tax withheld on your paycheck, then you are most likely eligible to receive some (if not all) of it back. The only way to claim that refund is to file a tax return. It is your money, so there is no reason to let the government keep it.

Eligibility for the Earned Income Tax Credit: Even if you have claimed the maximum exemptions on your W2 and have no income taxes taken out of your paycheck, you may still be eligible for a refund through the Earned Income Tax Credit. The EITC is a refundable credit; this means you are eligible to receive this money back even if you did not pay anything to the IRS.

This credit is for low-income earners and eligibility & amount of credit are determined by age, income, filing status and number of dependent children of the taxpayer. In some cases, the EITC can add up to a couple thousand dollars or more, so this could be a significant amount of money you are leaving on the table.

Eligibility for the Additional Child Tax Credit: Low to middle income taxpayers with children under age 17 are eligible for the $1000 Child Tax Credit. This credit is not refundable, so it will only give you a dollar for dollar reduction from the amount you paid in taxes. However, taxpayers with earned income of over $3000 can claim the Additional Child Tax Credit. This credit is refundable, and the amount of the credit is determined by your income and filing status.

Eligibility for the American Opportunity Credit: Did you go back to school last year? If so, you may be eligible to claim a credit for college tuition, books and other accessories you paid out of pocket. Depending again on your income and filing status, a portion of the American Opportunity Credit may also be refundable.

Generally, it is best to file an income tax return even if you believe you are not legally obligated to do so. With the possibility of refundable credits available to you, it is likely you may be leaving money on the table by not filing.

If you are unsure if you should file and/or how to go about preparing an accurate return, speak to a tax professional for additional guidance and be sure you are claiming every dollar you are entitled to.