Not everyone is required to file a tax return. It depends on your age, filing status, and amount and type of income. Show If you make little income, chances are you won’t need to file. But there are some circumstances outside of income that can require filing a tax return. Let’s look at what’s involved in understanding how much you need to make to file a tax return. If you’re looking for an easy way to file your taxes, check out TurboTax. They are partnering with us to highlight how much you need to earn to file your taxes. If you don’t know if you need to file a return, TurboTax can help. Check out TurboTax here and get started for free >> Table of Contents Know The Standard Deduction Income Filing Thresholds Are You A Dependent? Social Security Benefits These Situations May Require A Tax Return Why You Might Still Want To File A Tax Return Note: This video may show some older deduction numbers, but the rules still apply. Know The Standard DeductionIn general, you DON’T need to file a tax return if your income was less than the standard deduction. Standard Deduction 2021 Tax Year Single $12,550 Head of Household $18,800 Married Filing Separately $12,550 Married Filing Jointly $25,100 Qualifying Widow(er) $25,100 For those over 65 years of age, the standard deduction increases depending on your filing status: Over 65 Increase in Standard Deduction 2021 Tax Year Single or HoH $1,650 Married Filing Joint and 1/2 over 65 $1,300 Married Filing Joint and Both 65+ $2,600 Because of the higher standard deduction, someone over 65 can make more than someone less than 65 and still end up paying less in taxes or even no taxes. For those who are legally blind, the standard deductions are: Legally Blind Increase in Standard Deduction 2021 Tax Year Single or HoH $1,650 Married Filing Joint and 1/2 Blind $1,300 Married Filing Joint and Both Blind $2,600 With the standard deduction covered, let’s look at filing income thresholds. Income Filing ThresholdsThe following is the lowest tax bracket for 2021: Rate Single Married Filing Jointly Married Filing Separately Head of Household 10% $0 - $9,950 $0 - $19,900 $0 - $9,950 $0 - $14,200 To understand how tax brackets work with the standard deduction, let’s say a 27-year-old single person makes $8,500 for the year. Does that mean they must pay a 10% tax on their income? No — the standard deduction must also be applied. The standard deduction for those under 65 is $12,550. Subtracting the standard deduction from this person’s income results in no taxable income. Therefore, no taxes are owed. If the same person made $12,551, they would be taxed on the $1.00. Are You A Dependent?Parents can claim their children as dependents until age 19. If they are continuing their education, parents can claim them until age 24.
Even if you could be claimed as a dependent and don’t need to file a return, you may still want to in order to claim a tax refund. We have a full article on parents and dependents here. Check out TurboTax here and get started on your return >> Social Security BenefitsFor seniors with social security benefits, generally, these benefits are not considered income and, therefore, not taxable. The situation changes if you are married and file a joint return with a spouse who is also 65 or older. In that case, if you have a combined income of more than $27,700, you must file a return. If your spouse is less than 65, your combined income needs to be more than $26,400. These Situations May Require A Tax ReturnYou might also be required to file for reasons other than, such as if you’re:
Just like the tax code, trying to determine if you make enough income to file a tax return can get involved. If you are unsure, it’s best to speak with a tax professional or use DIY tax software to see if it makes sense to file. Checkout TurboTax here and get started to see if you need to file a tax return >> Why You Might Still Want To File A Tax ReturnEven if you don’t need to file a tax return, you may still want to in order to claim your tax refund. For example, maybe you worked a part-time job and earned $5,000. You may have paid money in taxes, and you could get it back by filing a tax return. Using a service like TurboTax could be free! They offer a robust free tier that would allow you to file your tax return and claim your refund. Check out TurboTax here and get started >> Robert Farrington Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com. He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future. He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes. |