Filing Taxes if You Are Currently Incarcerated: A Step-by-Step Guide

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Being incarcerated can create significant challenges for inmates. When it comes to taxes, many inmates find it difficult to file and pay taxes during their incarceration. However, the failure to file and pay taxes on time can invite a wide range of penalties. It may be detrimental to your financial situation and can ultimately lengthen your sentence. Here's a step-by-step guide to filing taxes if you are currently facing incarceration.

Determine whether you qualify for tax credits

Tax credits lower the amount of taxes you owe. Depending on the tax credits you're eligible for, you may receive a refund during tax season. Inmates who earn less than the tax filing threshold may still qualify for tax credits, including the Earned Income Tax Credit (EITC) and the Child Income Tax Credit.

It's important to remember that income earned during incarceration does not qualify for a tax credit. However, inmates who have received income from other sources, such as income earned by a spouse or income earned before incarceration, may still qualify for tax credits.

Claiming tax credits requires filing your taxes. To understand how tax credits work and determine your eligibility, check out the IRS website. If you're not eligible for tax credits, filing your taxes is still necessary. Filing your taxes provides proof of income, which is necessary when renting or applying for loans. Additionally, filing creates a record of work history, which is required when applying for social security benefits.

File for previous years if necessary

If incarceration prevented you from filing taxes in recent years, file as soon as possible. Individuals have three years from the due date of their most recent tax return to claim tax credits or refunds that they qualify for.

Individuals who failed to file taxes in previous years and owe money are subject to penalties and interest. If you can't afford to pay the full amount, the IRS offers payment plans, tax debt settlements, and temporary collection delays. To determine whether you qualify, contact the IRS or a professional tax planning service.

Find out what options are available

If you're currently facing a temporary sentence, consider filing for a tax extension. Form 4848 provides eligible individuals with a six-month filing extension. The form must be filed and submitted by the tax deadline.

If you're incarcerated for a longer sentence, explore what options are available for filing. Many facilities offer in-house tax or lawyer services to help inmates file their taxes. Also, designating the Power of Attorney allows you to choose someone you trust to take care of your financial situation. Designating the Power of Attorney requires completing a form, assigning an individual the power of attorney, and getting the form notarized.

If you're filing taxes jointly with a spouse, your spouse can complete the necessary forms for you. To legally file taxes on your behalf, your spouse must bring the forms to you to be signed.

Free assistance is available

If you've earned less than $56,000 in the last year, the IRS offers free tax filing assistance through the Volunteer Income Tax Assistance (VITA) program. VITA provides free tax preparation for individuals regardless of age. All tax preparers are IRS-certified annually and all returns are reviewed by a second preparer before filing. Along with VITA, the Tax Counseling for the Elderly (TCE) program provides free tax help for taxpayers over 60 years of age and specializes in questions about retirement and pensions. 

Although incarceration creates numerous obstacles for inmates, following this guide can help you file your taxes quickly and easily. The failure to file taxes while incarcerated can ultimately lead to further mugshots records which can be accessed through services like Go Look Up. By filing your taxes, you'll be in good legal standing by all accounts.