Tax season is here and almost everyone around you is scrambling to file taxes. Are you worried? Is it all going over your head? Fret not. This article will tell you exactly if you need to file tax returns and why.
Well, after considering everything, whether or not you need to file your federal tax returns with the IRS depends on certain conditions – your income, filing status, age, and whether you fall under a special circumstance.
What is a Tax Return?
A form filed annually by an individual or business with a tax authority that covers your income, expenses, and other relevant tax regarding information, that allows you to estimate the tax liability, schedule tax payments, and request refunds on the overpayment of taxes.
You should consult a tax professional to understand how to file tax returns, what all tax obligations and concerns are, review Federal Tax brackets, or know what circumstances you might face if you don’t file one.
How Much You Have to Make to File a Tax Return in 2023?
Depending upon your age and income status, here’s how much you have to make to file a federal income tax return-
| Under 65 | 65 and older | |
| Single | $12,950 | $14,700 |
| Married, filing jointly | $25,900 if both spouses are under 65 years $27,300 if one spouse is under 65 years and another one 65 or older | $28,700 if both are 65 or older |
| Married, filing separately | $5 | $5 |
| Head of household | $19,400 | $21,150 |
| Qualifying widow(er) | $25,900 | $27,300 |
If you’ve been claimed as a single dependent, the rule for income tax returns changes and applies as follows:
| Under 65 | 65 and older | 65 or older and blind | |
| Unearned income more than | $1,150. | $2,900. | $4,650. |
| Earned income of more than | $12,950. | $14,700. | $16,450. |
| Gross income was more than the larger of | $1,150, or your earned income (up to $12,5500), plus $400. | $2,900, or your earned income (up to $12,550), plus $2,150. | $4,600, or your earned income (up to $12,550), plus $3,900. |
If you’ve been claimed as a married dependent, the rule for income tax returns changes and applies as follows:
| Under 65 | 65 and older | 65 or older and blind | |
| Unearned income more than | $1,150. | $2,550. | $3,950. |
| Earned income of more than | $12,950. | $14,350. | $15,750. |
| Gross income is more than | $1,150 or earned income (up to $12,550), plus $400. | $2,550, or earned income (up to $12,550), plus $1,800. | $3,950, or earned income (up to $12,550), plus $3,200. |
Other Circumstances to File Income Tax Returns
- There are a few additional circumstances that require annual tax return filings, even if you fall below the threshold.
- Self-employed earning more than $400.
- You owe Social Security or Medicare tax on tips that you didn’t report to your employer.
- You owe uncollected Social Security, Medicare, or railroad retirement tax on tips including additional taxes on health service accounts or group life-term insurance plans that you didn’t report to the employer.
- You owe taxes on household employees and alternative minimum tax.
- Owing an exercise tax on retirement plan assets.
- You owe taxes on IRA, health savings account, or other Medicare Advantage MSA.
- You, your spouse, or a dependent who got advance payments of the premium tax credit for health coverage through the insurance marketplace.
Why You Should File Tax Returns
Even if you’re not required to file a tax return, you have reasons to file it anyway.
- Even if you withheld taxes from your pay, you can get the money back on filing tax returns.
- You are eligible for refundable tax credits including Earned Income Tax Credit, Child Tax Credit, and American Opportunity Education Credit, all of which give you a tax return.
- You qualify for credit for federal taxes on fuels and premium tax credit.
- If you’re not sure whether to withhold taxes or qualify for a tax credit and you made approximate tax payments, you can file a tax return to avoid missing out.
It’s better to start filing your tax return as early as possible. Understand the IRS’ annual threshold limit and decide to file returns, but keep in mind the complexity of your returns to receive a refund. Sometimes you might encounter severe changes in your business from year to year, so keep yourself updated and follow & comply with the advice of your financial advisor to get accurate returns.
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