How Much Money Do You Have to Earn to File Taxes?
This is a common question during tax season. The income threshold changes from year to year, but the real question is…
Great question! Now is the time to start thinking about your income tax situation.
Will you be filing an individual return this year? How much do you have to make to file taxes? What other questions should I be asking?
The IRS has an ever-changing and complex system, and navigating it is not always simple. But it’s vitally important to understand. We’re here to help.
In this article, we will explain how to understand income, minimum income cutoffs to file taxes, and other reasons a tax return may be required.
After reading this, you won’t need to ask the question, “How much do you have you make to file taxes?” You’ll know.
Understanding Gross Income
Everyone’s goal is to keep as much money as possible. And why not? You earned it! But taxes are a necessary feature of living in a society like the U.S. and we all want to do our part.
The first step to figuring out the monetary amount associated with your particular “part” in society is to calculate gross income.
Your gross income is defined as the total amount of money or income earned in the previous tax year.
For tax purposes, gross income is everything received that is not exempt from tax. This includes: any income from U.S. sources; money from the sale of the main home (even if some is tax exempt); gains from form 8949 or Schedule D; as well as certain business income.
How much do you have to make file taxes? That’s where the thresholds come in. Each year, the government puts out a list of thresholds for determining whether or not someone is required to file income taxes that year.
It’s a burning question, isn’t it? Well, soon it will be answered. Perhaps even in the following bulleted list.
These are the 2017-2018 filing season thresholds for members of each filing status:
If your gross income is above the threshold for your age and filing status, you must file a federal income tax return with the IRS.
Remember, this chart applies only if you’re not being claimed as a dependent on someone else’s tax return. If another person is claiming you as a dependent, the rules are different.
Filing Taxes as a Dependent
When you’re filing taxes as a dependent, the list above doesn’t apply. Different thresholds must be followed.
Here are the guidelines:
It should be noted that these are not the rules for married taxpayers. Instead, these are rules for dependents who also happen to be married.
Other Reasons to File a Tax Return
Beyond your income, there may be other reasons to file a tax return this year. Particularly if you’re self-employed.
All taxpayers that are self-employed must file a federal income tax return if their total earnings are over $400, including 1099-MISC-reported non-employee income.
You may owe special tax for these reasons:
While you may not be required do an income tax return, you may still chose to do so. One reason might be the credits and tax breaks that are available. You also might qualify for a refund if the government withheld excess money.
Receiving Your Tax Refund
Are you ready to start the filing process? Once it’s complete and processed, there are four main ways to receive your refund.
This is the traditional way to receive a refund. Many taxpayers still prefer this method, even though it is the slowest way to get your tax refund money.
Beginning in 2010, the IRS began offering this option. To get your refund this way, you must fill out an extra form at the time of filing. The benefit of this method is a fixed rate interest and inflation interest on top of the total. However, it’s not a lot of money.
The most popular way to get your tax refund is direct deposit. This is the fastest way to receive your money. And you’re able to split it among multiple bank accounts, per IRS rules. Similar to direct deposit of your paychecks.
Many tax service companies offer refunds via a prepaid card. They say this is faster and more convenient, so it appeals to taxpayers. But be wary, as there are bound to be fees. You’ll have ATM withdrawal fees or monthly inactivity fees. These add up.
How Much Money to File Taxes?
Throughout this article, we’ve shown you how much money to file taxes is needed for different filing statuses. Now you know what the minimum income amount is in order to file a tax return. If you’re ready to get started, Locus Tax can help with your return. All it takes is filling out a simple form. Start today!