30 Jun What is the Amount of Income Needed to File Taxes?
In these troubling times when it’s hard to make ends meet, and we worry about the stability of our jobs, asking whether you’re still required to file taxes is a worthwhile question to ask.
Each year, the IRS updates the contents of Publication 501 on the details of who must file. Some factors decide whether you need to pay taxes; they are:
- Gross income
- Filing status
- Whether you are a dependent
According to the IRS’s progressive income tax system, your gross income needs to be at least $12,400 if you’re single and under the age of 65. However, if you’re single and 65 or older, your gross income should be at least $14,050. If your filing status is Married Filing Jointly and both you and your spouse are under the age of 65, your gross income should be at least $24,800. But if both you and your spouse are older than 65, your gross income should be at least $27,400. If you’re married but filing separately from your spouse, your minimum gross income must be $5, regardless of your age.
The minimum gross income to pay taxes is also different if you’re the head of the household. If you’re under 65, you need to earn at least $18,650. And if you’re over 65, the minimum gross income for a Head of Household filing status is $20,300. If you are Qualifying Widow(er) with Dependent Child in the Under 65 category, you should earn at least $24,800. The minimum gross income is $26,100 if your filing status is Qualifying Widow(er) with Dependent Child and you are 65 years old and over.
Therefore, you don’t need to file a tax return if ALL of the following apply to you:
- Below 65 years old
- Earn below $12,400
- No special circumstances requiring you to file (self-employment income)
Additional Considerations to Filing Taxes
If your income falls below the minimum income to file taxes, there may be instances that will make you want to file a return, including:
Earned income tax credit (EITC) – Lower-income workers may be eligible for EITC. You may qualify for EITC depending on your earned income and adjusted gross income, qualifying dependents, and whether you meet the basic rules, including SSN and filing status.
Refund of withheld income taxes – You may consider filing a return to obtain a refund if you happened to receive pay during the year and had income tax withheld.
On March 6th, 2021, Congress passed the H.R.1319 – American Rescue Plan Act of 2021 to relieve the impacts of the COVID-19 pandemic. The bill included expanding and modifying certain tax credits like earned income tax credit and child tax credit. The ARPA also temporarily lowers the thresholds for eligibility, requiring filing a tax return for the 2021 tax year.