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10 reasons to file a tax return even if you don't have to

Who must file a 2019 tax return

Grown ass woman filing taxes giphyBroad City image via Giphy.com

Do you have to file a return? Sorry to be the bearer of bad news, but the answer usually is yes.

Believe it or not, some people make it through tax-filing season without any hassle. That's because the Internal Revenue Service doesn't require them to file taxes.

Unfortunately, most of us aren't that lucky.

So just who has to file a tax return?

Generally, if you are a U.S. citizen or resident you must consider three things when determining whether you have to file a tax return: your age, your filing status and your income.

General filing requirements: The table below shows how the three filing requirement factors work, specifically as to whether you need to send the IRS a Form 1040 this year to account for your 2019 income.

2019 Filing Requirements for Most Taxpayers


 If your filing status is: 

 AND at the end of 2019
 you were:

THEN file a return if your gross income was at least:

 Single

 64 or younger
 65 or older

 $12,200
 $13,850

 Married filing jointly

 64 or younger (both spouses)
 65 or older (one spouse)
 65 or older (both spouses)

 $24,400
 $25,700
 $27,000

 Married filing separately

 Any age

 $5 (Yes, five bucks)

 Head of Household 

 64 or younger
 65 or older

 $18,350
 $20,000

 Qualifying widow/widower

 64 or younger
 65 or older

 $24,400
 $25,700

 

Source:

 1RS 2019 Form 1040 instructions

As the table indicates, older age is a special consideration when it comes to determining whether you must file a tax return. And the IRS tweaks that age a bit to the advantage of older New Year's Day babies.

The IRS says that if you were born on Jan. 1, 1955, you are considered to be age 65 at the end of 2019. That one-day shift lets you, as a de facto senior citizen, make a little more money before you have to mess with tax filing.

Regardless of age, the earnings target is the same for married couples who file separate tax returns.

And in most cases, you can't be too young to file if you make enough money. Tax law, however, does take into account other factors in figuring the filing threshold amounts when someone is a tax dependent (more on this in a couple of paragraphs).

Earnings, gig included, that count: Now about the income that triggers the need to file a 1040.

The IRS says that's your gross income, which is all 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.

In this gig economy world, all income definitely means money from these jobs, be they your full-time work or simply side hustles to supplement your wage income.

And these extra earnings count even if you don't get an official tax form, usually a 1099-MISC or 1099-K in connection with your side hustle.

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.

And since the IRS has seen it all, it notes that if even if you're married, if you didn't live with your spouse at the end of 2019 (or on the date your spouse died) and your gross income was at least $5, you must file a return regardless of your age. That's the same as the five-buck income threshold for married filing separately folks.

Dependent filer considerations: There also are filing matters to consider if you're a dependent for tax purposes.

If your parent (or someone else) can claim you as a dependent, the IRS created the chart below to help you figure out whether you must file a return.

Tax dependents filing requirements TY2019 table Form 1040 instructions-cropped
In addition to age and income, in the case of determining whether a tax dependent must file that potential filer's visual acuity is taken into account.

The IRS refers to it as being blind, but technically you don't have to be totally sightless. Your poor eyesight counts if at the end of the tax year your eye doctor issues a statement that you can't see better than 20/200 in your better eye with glasses or contact lenses, or your field of vision is 20 degrees or less.

Your ophthalmologist's or optometrist's statement also must certify that your eye condition isn't likely to improve beyond either of those conditions. You don't have to file the statement, but do keep it for your records in case the IRS questions why you didn't file.

Also note the various income designations in the chart that are used to figure whether a dependent must file.

  • Unearned income includes taxable interest, ordinary dividends and capital gain distributions, unemployment compensation, taxable Social Security benefits, pensions, annuities and distributions of unearned income from a trust.
  • Earned income includes salaries, wages, tips, professional fees and taxable scholarship and fellowship grants.
  • Gross income is the total of your unearned and earned income amounts.

Yeah, not surprisingly, calculating your filing responsibility as a dependent can be a bit (OK, a lot) confusing. Your tax software or tax preparer should be able to help clear up your situation.

Other filing factors: Such complications are one of the biggest complaints about taxes, close on the perennial grousing about the actual dollars we pay.

This is obvious in the above rules about how income and filing status determine whether you must file a 1040.

But wait. There's more!

Other factors that, well, factor into the filing or not decision include —

  • You made, after expenses, at least $400 from self-employment. This is an area where folks with side hustles need to pay close attention. While you might not technically have made enough to require filing, you still have to file in order to pay the self-employment (SE) tax on these independent earnings. The tax due here, calculated on Schedule SE, is the self-employed person's version of the payroll taxes that go toward Social Security and Medicare, aka FICA, that are taken out of salaried workers' checks. Again, it bears repeating. It's possible you could owe SE taxes, but no income tax. However, you still must file to report those independent earnings.
  • Your job includes gratuities, but you didn't report all your tips to your employer. You now need to do that by filing a return and also paying the SE tax on those tips. The same SE filing is required if you got a paycheck, but your employer didn't withhold these FICA taxes.
  • You owe the Alternative Minimum Tax (AMT). This parallel tax, created in the 1960s to ensure that rich taxpayers paid at least some (aka minimum) amount of tax, used to snare a lot of middle-income filers because it wasn't indexed for inflation. That changed in 2013, with the annual exemption amounts now reducing the number of folks caught in this tax net. The TCJA went even further, increasing AMT phaseout threshold amounts to $1 million for married taxpayers filing a joint return and $500,000 for all other taxpayers. If, however, you make enough that you have to pay the AMT, then you must file. A check of the most recent AMT income exclusion inflation adjustments will give you an idea of whether you'll be affected by the AMT.
  • You or your spouse or dependents got advance payments of the premium tax credit to help cover Affordable Care Act (ACA) medical coverage purchased through the healthcare Marketplace. Yes, the ACA, or Obamacare as it's still popularly known, is still around. So is the tax break to help you get coverage. But you must to file to reconcile the health care credit amount you got upfront to buy your policy.
  • You have household help and pay your employees enough to trigger employment taxes. I know, if you can hire help, you probably made enough to have to file a return anyway. But just in case, the IRS says that if in the 2019 tax year you paid $2,100 or more to hired help in or around the house, you must file a Schedule H with your Form 1040.

    Household helper
    Although this requirement is popularly called the nanny tax, it covers not just childcare assistance, but also maids, housekeepers, gardeners and others who provide services as your employee for the upkeep of your private residence. Note the employee characterization. This doesn't apply independent contractors who do household work for you, such as the housekeeper who comes in once a week or the monthly lawn service crew. But be careful here. The IRS looks closely at worker designations. The good news, though, is that if you are filing a tax return only because you owe this tax, you can file Schedule H by itself, without having to hassle with the 1040.

You can find more about filing requirements in the Form 1040 instructions (Chart C), as well as IRS Publications 501, which discusses (in part) filing, and 17, the IRS' general tax guide.

Don't want to decipher tax-speak? No problem. You also can use the IRS' online tool to determine whether you need to file a return this year.

You also might find these items of interest:

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