How much do I have to earn to file taxes?

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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 have very little income, chances are you don’t need to file. However, a few circumstances may require tax filing or make filing a good idea even though it’s not required.

Here’s what you need to know about how much you have to make 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 a dependent on someone else’s return. Here are those numbers from the 2020 Form 1040 Instructions.

Most people don’t have to file a tax return if their income was less than the standard deduction available for their filing status and age. One glaring exception is people who are married filing separately, who have to file if they make $5 or more.

Age is a key 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 received in the form of money, goods, property and services, including income from outside of the U.S., from sales of stock, and from a business. It also includes proceeds from the sale of your home, even if the sale isn’t taxable.

Filing Requirements for Dependents

If someone else claims you as a dependent, the IRS has different filing requirements. Your marital status, age, and income still matter, but the kind of income you receive also matters.

The IRS generally breaks income out into two categories: earned and unearned income.

  • 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.

Here are the 2020 filing requirements for dependents.

Married dependents also have to file a tax return if they had at least $5 of income and their spouse files a separate tax return and itemizes deductions.

Reporting a child’s income on the parent’s tax return

If a dependent child has only interest, dividend, and capital gain distribution income, the child’s parent(s) can choose to report the child’s income on their own tax return. To qualify for this option, your child has to meet all of the following requirements:

  • Under age 19, or under age 24 and a student
  • Income only from interest, dividends, and capital gain distributions
  • Income was less than $11,000
  • Doesn’t file a joint tax return with their spouse
  • Didn’t make any estimated tax payments, have federal income tax withheld, or have an overpayment applied from a previous tax year

If your child meets all these requirements, use Form 8814 to report their income on your tax return.

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:
  • Alternative minimum tax (AMT)
  • Additional tax on a qualified plan. For example, on 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
  • You 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

Life events like starting or leaving a job, getting married or divorced, or having a child can change your tax filing requirements. It’s a good idea to review the filing requirements each year to determine whether you need to or could benefit from filing a return.

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