Making decent money is often difficult for those incarcerated. The wages paid to those that work in prisons are typically very low.
The IRS provides a threshold of around $12,000 on taxable income. So if you earn less, you do not need to file a federal tax return. Most inmates have this money paid to their prison account to make essential purchases.
Once released, a felon can now apply for more gainful employment. However, will the many rights stripped, do felons get tax refunds?
There is no doubt that with a felony conviction, life changes in many ways. Felons are no longer entitled to gun rights or get to serve on a jury. Depending on the state, they may also be restricted from travel and lose their voting rights.
Paying taxes is however not a right, but a civic duty. As such, felons that earn taxable income are required to pay taxes.
Why does this matter? Let’s discuss this below.
Why Pay Taxes?
Paying taxes is rarely a joyful event. For many people, these deductions can significantly affect their quality of life. This obligation means less money in their pocket.
Given the long period they have been unable to work, the reduction in earning is unwelcome.
However, the reasoning behind taxation is sound. Many of the public services we enjoy are only made possible through taxation. From the roads we drive on to the police that serve us, it is majorly paid for by taxes.
Most transactions we undertake will often include some form of tax. For instance, the sales tax on receipts at the grocery store and the deductions on paychecks. The government has multiple tax revenue streams.
Even passive sources of income like dividends from financial instruments and rental money are taxed.
People are expected to report on these incomes to the IRS and pay in the required tax. In many jobs, the employer will be the one to make the deduction and send it in. The employee is however still responsible for filing the return.
Often the calculations result in an overpayment that is returned as a tax refund. This happens to over 70% of taxpayers.
It can come from either the state or federal government. It often comes as a check in the mail or transfers to your account.
This return is something many people look forward to. The sums can be quite hefty. They can be put towards paying debts, taking a vacation, and much more.
Given how rewarding it feels to get a tax refund, some felons may think they are not entitled. Before we get to that, let’s consider the tax issue first.
Must Felons Pay Taxes?
As long as you are earning a taxable income, you are required to pay taxes. It does not matter if you are a felon or not.
Even during the time of incarceration, it is advisable to always file returns. More so if you have investments that are bringing in some income. Or if you have a spouse earning a taxable income.
You can have your spouse file the returns on your behalf. Or arrange with your tax accountant or lawyer for the same. They can easily bring in the paperwork for you to just sign.
The last thing you need when being released is to find yourself being pursued for tax evasion. This may be prosecuted as a felony crime. It can attract a sentence of up to 5 years and fines of up to $100,000 for individuals.
Even for those without such taxable incomes, filing is still recommended. This is to keep qualifying for tax credits. These include the Earned Income Tax Credit (EITC) and Child Tax Credit.
The other incomes that are below the filing threshold may qualify you for this.
Those recently released may still be able to claim such credits if they make later filings. They can do so for up to 3 years from the due date of their last return.
So while filing taxes can help retain tax credits, does it entitle a felon to refunds?
Do Felons Get Tax Refunds?
As long as one is paying taxes, they are entitled to their tax refunds. This however changes if there are certain outstanding obligations.
Felons are subject to a variety of penalties. This can include fines and restitution. The government can seek to recover such monies through tax refunds.
This often happens in financial crimes where victims have been defrauded. It is a way to hopefully get then back their money.
But it is not often successful. There are billions still owed to this day.
It is also noteworthy that one cannot easily escape restitutions. They cannot even be discharged through bankruptcy. The court orders do not expire and must be repaid in full.
So for felons that have been sentenced to pay certain fines and restitutions, tax refunds may not be accessible. The IRS is notified of such outstanding penalties. They will then apply a lien on any refunds.
Yes, felons can get tax refunds. As long as they do not have any unpaid fines or restitution.
Felons are entitled to their tax refunds as long as they are not owing on restitutions. Note that this is part of the punishment for whatever crime was committed.
It can be disappointing to expect a tax refund and get nothing in the mail. However, remember that this is just another consequence of the crime you committed.
Just because you are released does not mean you are done with the justice system. You must fulfill all the penalties handed down by the court. This includes any financial obligations meted.
A failure to resolve these penalties can affect other areas such as securing a passport.
The best way to get past this mistake is to try and relieve this financial burden. Selling an asset or boosting your deductions from pay may help.
It will allow you to get back to a law-abiding life sooner. Without worrying the government is still after you.