This post was updated March 22, 2018.
Do you have to file a return? Don't shoot the messenger, but the answer usually is yes.
If you are a U.S. citizen or resident who made money last year, whether you must tell the Internal Revenue Service about it depends on three things:
- Your gross income,
- Your filing status, and
- Your age.
The IRS created the table (shown as Chart A in the 2017 Form 1040 instructions) below to give you an idea of whether you should start getting your filing material together.
2017 Filing Requirements for Most Taxpayers
If your filing status is:
| AND at the end of 2017
|THEN file a return if your gross income was at least:|
|Single|| 64 or younger
65 or older
|Married filing jointly|| 64 or younger (both spouses)
65 or older (one spouse)
65 or older (both spouses)
|Married filing separately||Any age||$4,050|
|Head of Household|| 64 or younger
65 or older
|Qualifying widow/widower|| 64 or younger
65 or older
A quick filing note for some older New Year's Day babies. The IRS says that if you were born on Jan. 1, 1953, you are considered to be age 65 at the end of 2017. That one day shift lets you make a little more before you have to mess with filing.
Also, for filing requirement purposes, the IRS says that gross income means all income you received in the form of money, goods, property, and services that isn't exempt from tax, including any income from sources outside the United States or from the sale of your main home, even if you can exclude part or all of it.
You don't, however, have to include any Social Security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2017 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 or $32,000 if married filing jointly.
Again, don't shoot the messenger.
Other filing factors: There are other things to take into account when it comes to filing if someone can claim you as a tax dependent.
Also, if you netted at least $400 from self-employment endeavors, then you need to file in order to pay your self-employment tax. This amount, calculated on Schedule SE, is the self-employed person's version of the payroll taxes that are taken out of salaried workers' checks.
And yes, it is possible that you could owe SE taxes, but no income tax.
When you should file: OK, you've discovered you technically don't have to file a return. Great, right?
To borrow a favorite word from our new president, Wrong!
Sometimes even if you don't have to file a tax return, it's to your benefit to do so.
Here are 10 situations when you should file a federal income tax return:
- You had federal income tax withheld.
- You made estimated tax payments.
- You qualify for the Earned Income Tax Credit (EITC). This tax break for lower- and middle-income workers is refundable, meaning you can get a tax refund even if you don't owe any tax. The amount of the credit and the income thresholds are adjusted annually for inflation (and revised for the 2018 tax year to comply with Tax Cuts and Jobs Act inflation methodology changes).
- You qualify for the additional child tax credit. Like the EITC, the additional child tax credit is refundable.
- You qualify for the Affordable Care Act's premium tax credit. Yes, it's still law. Most people who qualify for this credit get it in advance when they purchase their health insurance via a marketplace. But you do have the option of paying your premiums yourself and then claiming the credit when, you got it, you file your return.
- You qualify for the health coverage tax credit (HCTC). The The HCTC is a tax credit that pays a percentage of health insurance premiums for certain eligible taxpayers and their qualifying family members. The HCTC is a separate tax credit with different eligibility rules than the premium tax.
- You qualify for the American opportunity tax credit. This educational tax break could give you a credit of up to $2,500 and portion of it — up to $1,000 — is refundable to some qualifying filers.
- You qualify for the credit for federal tax on fuels. Yes, this is rather arcane, but some folks are affected by this. Get more info in Form 4136 instructions.
- To establish a placeholder for tax deductions and/or credits you need to carry forward. TurboTax points out that, for example, you can't claim a home office deduction so large that it would produce a loss. Instead, you claim zero business income for the year and carry any leftover deduction into the next year. But in order to claim that extra write-off in future years when you do have more income, Smart Money writer Bill Bischoff says you need to file for that initial claim.
- To start the audit statute of limitations clock ticking. The IRS generally can go back three years to look at your old tax filings. But that time frame doesn't start until you actually file a 1040. So even if you didn't make quite enough to trigger the filing requirement, you might want to make sure the IRS can't come back, say, 10 years later to ask about why you didn't file in 2018.
Remember, the only way to get any tax money you're owed because of over-withholding or credits for which you qualify is to file for them.
And if any of these 10 circumstances applies to you, then consider filing.
Mandated refund delay: One final thing to consider. If you're filing because you are eligible for the EITC or additional child tax credit, the IRS has to hold your refund until Feb. 15, and more realistically until the end of that month.
The delay is the law, not just because the IRS wants to make your life more difficult. So yell at your Representative and Senators, not the tax agency.
But the delay is for a good reason. The IRS can use the extra time to double check the filing and make sure it's from you, the legitimate tax filer, and not by some identity thief looking to steal your tax cash via a fraudulent refund.
So double check whether you must file and, just as importantly, whether you should.
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