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How Much Does A Candidate Have To Earn To File The Taxes?‍

Filing a tax return is an annual practice for most of the people out there in the world, but not every single person has to file a tax return. It depends on the person’s age, their tax filing status, how much is their income, and from where does that income come from. Generally, if the person’s income is under a certain fixed level, there are chances that the person will not have to file their tax return. Nevertheless, there are a few exceptions where a person might have to file a tax return even if they fall below the minimum income category.    ‍The tax code has some particular set of rules which specify who needs to file a federal income tax return. If you did not earn a lot of money in the previous year, you might be under the minimum income category to file taxes.The person who earns less than the filing threshold is generally not required to file a federal income tax return, but it could still prove beneficial if they file the tax return. For instance, if the employer withheld federal income tax from the salary, filing a tax return is the only way a person can get their money back. And the said person may be eligible for refundable tax credits — such as the earned income tax credit — but the person has to file a return first and foremost to claim the credits.

Here’s what you should know regarding how much do you have to make to pay taxes.

Filing Requirements For Most Taxpayers

The Internal Revenue Services broadcast a table that displays the filing requirements for those who are not declared as dependent on some other person’s return every year. Below mentioned are the numbers from the latest Form 1040 Instructions.

The majority of people do not have to file a tax return when their income is below the standard deduction based on their age and filing status. Although, one obvious exception to this rule is that the spouses who separately file their return are eligible to file if they earn $5 or more than that.  

Age is an important factor in deciding whether a person must file for a tax return. People who are aged 65 years or above get a higher standard deduction. The earnings of a person are the final component in deciding whether a person has to file for the taxes.

The Internal Revenue Services classifies income as all the money you get in the form of earnings. This income includes all the income that comes in the form of actual cash, business, stock sales from outside of the United States, and all money received from services provided, goods, and property.

To break it down a little more, under mentioned are the basic income requirements for each of the tax filing statuses:

  • For singles, the requirements are $12,550 for people below the age of 65 and $14,250 for people above the age of 65.
  • If you are married and are filing separately, then the basic income requirement for people below and above the age of 65 is $5. 
  • If an individual is the head of the household, their requirements are $18,800 below the age of 65 and $20,500 above the age of 65.
  • The basic income requirement for qualifying widower is $25,100 for 65 and below and $26,800 for above 65 years.
  • For spouses filing jointly, requirements are $25,100 if both the partners are below the age of 65, $28,500 if both the partners are above the age of 65, and $26,800 if one person is below the age of 65 and one above the age of 65. 

Filing Requirements For Dependents

If somebody claims a person as a dependent, the rules will change. The person’s age, income, and marital status will still matter, but the type of income a person receives will also matter. The Income Revenue Services then divides the income into two separate categories: the one which a person earned, and the second is unearned. The unearned income comprises social security benefits, interest, pensions, profits from the capital, unemployment benefits, trust distributions, dividends, annuity payments, and assistance. Earned incomes comprise taxable scholarships, tips, salaries, fellowship grants, wages, and income from a business.

Both single and married dependents are supposed to file taxes if they made $12,500 in earned income and $1,100 in unearned income.

Why Do You Have to File A Tax Return Anyway

There are certain situations in which a person may have to file taxes even if their income falls under the numbers mentioned above. There are special taxes that a person still has to pay: 

  • The non-qualified distribution from a health savings account or premature withdrawal from an individual requirement account (IRA). 
  • Receiving distribution for a health savings account (HSA) or the medical savings account (MSA).
  • If filing for a tax return benefits the taxpayer.
  • If an individual received $108.28 from the church in the form of wages or had the minimum earnings of $400 from self-employment.
  • In case of no reporting of social security or medicare tips to the employer or on the salary a person received from the employer who did not withhold taxes.
  • If an individual received an advance on the premium tax credit or the health coverage tax credit, that individual has untaxed earnings from a foreign organization. 
  • You received an advance on the premium tax credit or the health coverage tax credit you have untaxed earnings from a foreign corporation.
  • On some occasions, it might be in a person’s best interest to file a tax return, even if it is not necessary. 

Below listed are a few of those instances where that may be the case: 

  • In case of federal income tax withheld, the person can get a refund.
  • If the individual files as a safeguard to begin the clock on the law of limitations for an Internal Revenue Services audit
  • If an individual is eligible for a refundable tax credit, like American Opportunity Tax Credit (AOTC), Additional Child Tax Credit (ACTC), or Earned Income Tax Credit (EITC).
  • If an individual wants to file the tax return in order to avoid a fraudulent return filed against them using their Social Security number
  • Suppose a person is eligible for an Economic Impact Payment but did not get one. Then they can get the payment by laying a claim to the Recovery Rebate Credit on a 2020Form 1040 or the 1040-SR.

Want to know what is the minimum income to file taxes? Business Tax benefits are where you need to head to get answers to all your questions. You can also learn everything about the Employee Retention Tax Credit and CARES Act from our website. 

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