You may feel that you don’t have to file a tax return even if you don’t owe any taxes. The IRS sees owing tax as a separate situation. The IRS has strict guidelines that determine who must file. This means that even if you don’t owe any tax, you might still need to submit a return. These restrictions are determined by the income you have and whether any automatic deductions reduce your income below taxable levels.
General Filing Requirement
For most taxpayers, the IRS has general filing requirements. Even if there is no tax owed, most taxpayers file a return if they have a gross income that exceeds the annual automatic deductions. The standard deduction is the primary automatic deduction. The amount you take will vary depending on your age and filing status. The standard deduction amounts can change every year. However, the standard deduction for a single filer is always lower than that of a household head.
Dependents And Children
Children and dependents may need to file their tax returns even if they are claimed on another tax return. These individuals are subject to reduced deduction amounts and therefore must follow a different set of rules.
In addition, a dependent can receive more unearned income without needing to file. Unearned income can include interest, dividends, and taxable Social Security benefits. However, earned income includes earnings from both employment and self-employment.
Owners Of a Self-employed Business
If you make money providing services to other people or entities than an employer or if your trade or business is operated as a sole proprietorship, partnership, or as a limited liability company, then you are self-employed. If your net earnings from self-employment exceed $400, you must file a return. To calculate and report your net profit and to pay self-employment taxes, you will need to file a Schedule C or C-EZ with your 1040.
You don’t have to file a tax return even if it is not required. Even if you do not owe any tax at the end, but have had taxes withheld from your paychecks or other payments, filing a return could allow you to get a refund. You might also be eligible to receive a refund through certain tax credits such as the Earned Income Tax Credit (EITC). You can only get your tax refund if you file a tax return.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.