How much do I have to earn to file taxes?
By Christian Ortega, Content Writer
Not everyone has to file a tax return. It depends on your age, tax filing status, how much income you earn, and where that income comes from. If you earned very little, chances are you don’t need to file. However, a few circumstances may require filing taxes or make filing an ideal even though it’s not necessarily required. Here’s what you need to know about how much you have to earn to file taxes.
Filing requirements for most taxpayers
Each year, the IRS publishes a table with the filing requirements for people who aren’t claimed as dependent on someone else’s return. Here are those numbers from the most recent Form 1040 Instructions.
Most people don’t have to file a tax return if their income is less than the standard deduction for their filing status and age. One glaring exception is spouses who file separately have to file if they make $5 or more.
Age is a crucial factor in determining whether you need to file a tax return because people age 65 or older get a higher standard deduction. Income is the final factor in figuring out whether you need to file.
The IRS defines income as all income you receive in the form of money, goods, property, and services, including income from outside of the U.S., from sales of stock, and a business. It also includes proceeds from the sale of your home, even if the deal isn’t taxable.
To break it down a little further, here are the basic income requirements for each tax filing status:
- Single: (Under 65 years old) $12,550; (over 65 years old) $14,250
- Married filing jointly: $25,100 if both spouses are under age 65; $26,800 if one spouse is under age 65 and one is 65 or older; $28,500 if both are 65 or older.
- Head of household: (Under 65 years old) $18,800; (over 65 years old) $20,500
- Married filing separately: (Under 65 years old) $5; (over 65 years old) $5
- Qualifying widower: (Under 65 years old) $25,100; (over 65 years old) $26,800
Filing Requirements for Dependents
If someone else claims you as a dependent, the rules change. Your marital status, age, and income still matter, but the kind of income you receive matters too. The IRS generally breaks income out into two categories: earned and unearned. Earned income includes salaries, wages, tips, income from a business, taxable scholarships, and fellowship grants. Unearned income includes interest, dividends, capital gains, unemployment benefits, social security benefits, pensions, annuity payments, and trust distributions.
Both married dependents and single dependents are required to file taxes if they made more than $1,100 in unearned income or more than $12,550 in earned income.
Why You Might Have to File a Tax Return Anyway
Here are a few situations that may require you to file a tax return even if your income falls below the amounts noted above. You owe special taxes, including:
- Early withdrawals from an IRA or non-qualified distributions from a health savings account (HSA).
- Social Security or Medicare on tips you didn’t report to your employer or on wages you received from an employer who didn’t withhold taxes.
- You received distributions from a medical savings account (MSA) or HSA.
- You had at least $400 of earnings from self-employment or had at least $108.28 of wages from a church.
- You received an advance on the premium tax credit or the health coverage tax credit you have untaxed earnings from a foreign corporation.
- You Might Benefit from Filing a Tax Return
- In some cases, it might be in your best interest to file a tax return, even if it’s not required. Here are a few situations where that may be the case:
- You can get a refund of federal income tax withheld
- You qualify for refundable tax credits, such as the Earned Income Tax Credit, the Additional Child Tax Credit, or the American Opportunity Tax Credit.
- You qualified for an Economic Impact Payment (aka a stimulus check) but didn’t receive one. You can get that payment by claiming the Recovery Rebate Credit on a 2020 Form 1040 or 1040-SR.
- You want to file as a precaution to start the clock on the statute of limitations for an IRS audit.
- You want to file a tax return to avoid having a fraudulent return filed using your Social Security number.
