Not everyone is required by the Internal Revenue Service to file an income tax return. For most people, whether or not you’re required to file depends on your filing status and your gross income, which is your taxable income before any deductions or credits are taken. However, there are certain exceptions, such as if you have self-employment income, which could necessitate a tax return filing even if you’re not making much. Even if you’re not required to file an income tax return, it might be beneficial to do so if you had any income taxes withheld or if you are entitled to refundable tax credits.
If you only earned $700, you generally won’t have to file an income tax return unless you were self-employed or had substantial income from other sources. That being said, taking the time to file a return may be beneficial if you have had any tax withheld or if you qualify for valuable deductions and credits.
Tax Filing Requirements
If you only have $700 of income working as an employee during the year, you usually aren’t required to file an income tax return because your total income is well below the filing thresholds for all federal income tax filing statuses. However, if you have $700 of employee income but you have substantial other income, such as interest or capital gains income from investing, retirement plan distributions, or even barter income, you might exceed the threshold and be required to file a return.
Self-Employment Income Exception
If the $700 you earned was from self-employment income, you are required to file an income tax return because you’re on the hook for both income taxes and self-employment taxes. In fact, any time that you have more than $400 of self-employment income, you must file a federal income tax return. Self-employment taxes refer to the Social Security tax at 12.4 percent and the Medicare tax at 2.9 percent. For employees, these taxes are paid through payroll withholding. However, when you’re self-employed, you don’t have an employer to withhold the taxes from your paycheck on your behalf.
Tax Filing Threshold 2018
In 2018, the tax filing thresholds increased due to the increase in the standard deduction for each filing status. Though this was somewhat offset by the elimination of the deduction for personal allowances, the overall thresholds still increased. For singles, the standard deduction is up to $12,000 and for married couples filing jointly, it’s twice as much at $24,000. If you file as head of household, the standard deduction is $18,000.
Tax Filing Threshold 2017
The tax filing thresholds in 2017 are lower for every filing status, even though the threshold equals the standard deduction plus one exemption, which was equal to $4,050 in 2017, regardless of your filing status. For singles, combining the $6,350 standard deduction with the $4,050 exemption generated a filing threshold of $10,400. Married couples filing jointly had a threshold twice as high at $20,800. For heads of household, the $9,350 standard deduction plus the $4,050 exemption generated a filing threshold of $13,400.
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