Every single year without fail, tax time returns. If you’re already a seasoned tax veteran, then don’t worry. This article probably isn’t for you. However, if you are young and just started your first job or barely made any money last year, you might be wondering “how much money do you have to make to file taxes?” It’s a perfectly natural question, since taxes are generally complicated and a bit annoying. If you don’t really have to take the time to gather all your information and send it off to the IRS, why bother? Unfortunately, the answer is a bit complicated.
Ultimately, how much income you need to earn to file federal taxes with the IRS depends on several lifestyle questions. Other important factors like marital status, age, income levels, or retirement can come into play. In this article, we breakdown the minimum amount of money you have to earn before you are legally required to file a tax return.
In order to know how much money you need to earn before you are required to file your taxes, so some simple self evaluation. For starters, single people under the age of 65 can earn up $12,400 annually before they have to file taxes. If you earned less than that, the IRS doesn’t require you submit a return. Those who are 65 or older (and plan to file a single tax return) can earn a minimum of $14,050 before they have to pay any income taxes.
Married couples under 65 who file their tax return jointly need to earn at least $24,800 before they technically have to file taxes. If both spouses are 65 or older, they can make a minimum combined amount of $27,400. If only one spouse is 65 or older, then the difference is split. That means they can earn a combined income of $26,100 before having to file taxes. Oddly, those who are married but plan to file their income taxes separately are only required to earn a gross income of $5 before they must file a tax return.
Those who qualify as the “Head of Household” in their family have to file a tax return if they make $18,650 or more during a given year. If you are a Head of Household and over 65, however, you can earn $20,300 before having to file taxes.
You Might Want to File Anyway
Here’s a bit of financial advice, though. No matter how little you earned in a given tax year, you should always file your tax return. There are numerous reasons for this. The first is filing a return for yourself goes a long way in preventing identity theft. If you don’t file your own return, you might never know if some fraudster attempted to do one for you. The IRS isn’t likely to catch on either, unless they notice two returns with the same SIN. Filing an annual tax return will also help keep you safe from future IRS audits, as they will have a clear picture of your tax history.
It’s also possible that you will still get money back. Even though you didn’t earn enough to own taxes, they may still have been taken off your paycheck by your employer. You might also have eligible credits or deductions that could put some money pack in your pocket. It won’t be a lot, since your income was so low, but it’s still better than nothing.
The Bottom Line
Ultimately, every person needs to self-assess their own situation. Add up the income you earned in the previous year. Compare it to the numbers above, and see if you meet the threshold to need to do your taxes. Generally speaking, people who earn more than $12,000 a year, need to file a federal tax return. However, if in doubt, you should consult with a tax professional. Even using official tax software can be useful in figuring everything out. Helpful information can also be found on the official IRS website. A qualified tax expert can help ensure that you meet the required tax filing deadlines and that you pay the accurate amount of taxes.
Keep in mind that there are stiff penalties for those who fail to file taxes when they actually needed to. You can bet that the IRS won’t accept your excuse of “but I didn’t think I had to do my taxes.”
The last thing you want is the sudden realization that you owe years worth of back taxes. Don’t put your future self in that stressful situation.
Related from WalletGenius
Retirement SavingsThe Ultimate Guide To Calculating Social Security Benefits
Saving MoneyHow to Cash in Savings Bonds: Everything You Need to Know
Save MoneyElectric Car vs Gas Costs: Which Truly Saves You The Most Money?
Saving MoneyFree Food For March 2021: The Best Restaurant Deals We Found
Saving MoneySimple Lifestyle Changes That Will Save You Money
Saving MoneyHow To Save Money With Electric Heat
Saving MoneyFree TV Apps Worth Trying in 2021
UtilitiesThe Best Ways To Save Money On Your Water Bill
Saving MoneyThe Best Ways to Save Money on Gym Memberships
GroceriesThe Best Ways to Save Money on Groceries
Gift Ideas15 Walmart Black Friday Deals You Can’t Miss This Year
Gift Ideas15 Black Friday Deals To Get Your Christmas Shopping Done Early