It’s that time of year when people begin wondering whether they need to file a federal income tax return.
When in doubt, I say go ahead and file your return.
But I know you guys want numbers, so I’m going to give them to you.
The minimum income to file taxes isn’t one number that you can just compare your income to.
There are a series of questions you should answer to help you come up with the minimum income amount that applies to you. Let’s start with the IRS questionnaire found on their “do you need to file” page.
The questions are designed to help you determine whether you need to file a federal tax return and whether you need to adjust your Form W-4 to eliminate withholding.
The IRS has stated that they want to help eliminate wasted time and money from returns that are filed that shouldn’t be. I say you take them up on that offer and work through the questions.
According to the IRS website, answering these question should take you no longer than 10-15 minutes, which is certainly worth your time, especially if it saves the time it would take to file or if it saves you money that shouldn’t be withheld.
If you’d like a preview of what you’ll be asked on the IRS questionnaire, here are the pertinent questions:
- Did you have Federal taxes withheld from your pension and wages for 2016 and wish to get a refund back?
- Are you entitled to the Earned Income Tax Credit or did you receive an Advance Earned Income Credit for 2016?
- Did you receive unemployment income?
- Were you self-employed with earnings of more than $400?
- Did you sell your home?
- Will you owe any special tax on a qualified retirement plan (including an IRA or a Health Savings Account [HSA])? You may owe tax if you:
- Received an early distribution from a qualified plan
- Made excess contributions to your IRA or HSA
- Were born before July 1, 1946, and you did not take the required minimum distribution from your qualified retirement plan
- Received a distribution in the excess of $160,000 from a qualified retirement plan
- Will you owe Social Security and Medicare tax on unreported tip income?
- Will you be subject to the Alternative Minimum Tax (AMT)?
- Did you earn $108.28 or more from a tax-exempt church or church controlled organization?
- Did you receive an advance payment on the Premium Tax Credit?
If you answer yes to any of those questions then you should file a federal tax return regardless of your earnings.
Right away you should see that if you have self-employment income of more than $400 then you need to file.
If you answer no to all of the questions, then you might be able to avoid filing.
The next question you need to ask is whether someone else can claim you as a dependent. If you are not a dependent AND you are under 65 years of age, then you won’t need to file taxes unless you income exceeds (numbers updated for tax year 2015):
- $10,350 (single filer),
- $13,350 (head of household),
- $20,700 (married filing jointly),
- $16,650 (qualifying widower with dependent child).
Note that if you are married, filing separately, you will need to file a return.
Note that for those filers 65 and older, the income numbers are slightly higher for some filing types. See the IRS questionnaire for more info on this.
If you are a dependent then you follow a different set of rules. It’s sort of complicated, but basically, if you are a dependent who is under 65 who has unearned income (i.e. interest income) over $1,050, or earned income (i.e. wages) over $6,300, or if your combined earned and unearned income exceeds $6,300, then you need to file.
If your income is in the lower range and you are just not sure what to do, you can always start to complete a federal tax return through a free filing service like the one TurboTax offers. Their software should help you determine if filing is even necessary.
Always, I repeat, ALWAYS file if you had taxes withheld from your paycheck or if you suspect you might qualify for a refundable tax credit, like the child tax credit, education credits, etc.
What about you? Did you earn enough to file?