Welcome to our guide explaining who is required to file tax returns in the United States. Tax laws can be complicated and they change every year, so this is a good question to ask each year to stay compliant with the current year’s requirements.
Introduction
Each year the IRS outlines specific guidelines that explain who needs to file a federal tax return. This will be based on various factors such as how much income you have, your age, filing status, and what kinds of income you have. Let’s start by breaking down these different factors.
Income Levels and Filing Requirements
The main factor that determines if you need to file a tax return is your income. If your gross income meets or exceeds the standard deduction for your current year ($13,850 in 2023), you are most likely required to file your tax return. Keep in mind that these numbers are based on your filing status for that year such as single, married filing jointly, married filing separately, qualifying widow(er), or head of household.
Dependent Status
Dependents and children might need to file tax returns as well, depending on their earned income as well as whether they are claimed on someone else’s tax return, and their age. The rules can be intricate so it’s important to dig into the latest guidelines or see professional help for your situation.
Self-Employed Individuals
If you are self-employed you have a tax filing requirement if you net more than $400 per more in that year. Self-employed individuals need to pay self-employment tax in addition to income tax. Self-employed individuals also need to make estimated tax payments throughout the year.
Individuals Receiving Social Security
Retirement income brings its own unique set of rules. For example, if you receive social security and it exceeds certain limits you might need to file.
To find out if your social security is taxable, do the following:
Add all the income you have including tax-exempt income(for example interest or income from jobs) and add it to one-half of your social security income. This total amount is your combined income.
If you are single
If your combined income is between $25,000 and $34,000 then you might have to pay tax on up to 50% of your Social Security benefits
If your combined income is more than $34,000 up to 85% of your benefits might be taxable
If you plan to file jointly with your spouse
If your combined income is between $32,000 and $44,000 you might have to pay income tax on up to 50% of your benefits
If your combined income is greater than $44,000 then up to 85% of your benefits may be taxable
If you are married but will file separately
You will most likely pay taxes on your Social Security benefits
Other Unique Circumstances
There are some situations where you have to file a tax return regardless of your income, for example, if you have household employees, received distributions from health savings accounts, or have foreign income. When in doubt, it is better to consult with a tax professional because there can be penalties for not filing tax returns when you should.
Frequently Asked Questions related to filing tax returns requirements
Should I file my tax return even if not required?
Yes, it might be beneficial to file a tax return if you are not required to. If you have income tax withheld from your paycheck or are due refundable tax credits like earned income tax credit then filing your taxes can result in a refund.
Can I get a refund if I don’t file my tax return?
You need to file a tax return to claim your refund.
What happens if I don’t file a tax return but I am required to?
Failing to file a necessary tax return can result in penalties and interest from the IRS.
What if I live abroad, do I still need to file a US tax return?
US citizens and green card holders who live abroad are required to file a tax return if their global income meets the US filing requirements.
Am I required to file a tax return if I only receive unemployment benefits?
Unemployment income is taxable, and you are required to file if your total income, including your unemployment income, exceeds the income threshold where you will have a tax liability.
Can the IRS take your 401k if you owe back taxes?
Yes, the IRS can take the money from a 401k that you are eligible to withdraw. Once you are in default, it is best to contact the IRS and work out a payment plan to pay what you owe.
