If you worked at any point during the last year and earned an hourly wage or salary, this means you had income. The question is, do you have to file a tax return? For anyone who worked full-time or put in a decent amount of part-time hours, the answer is an almost guaranteed "yes." But what if you worked a handful of hours, do you have to file taxes if you make less than $1,000?
Usually, if you earn less than $1,000, you probably are not responsible for filing taxes. However, if you are an independent contractor or self-employed, you need to report this income.
Do You Have to File for Such a Small Amount?
The short answer is, "It depends." If you worked a regular job, received a W-2 and that was the amount you earned for the entire year, then you most likely won't have to file since your standard deduction would be greater than your actual tax burden. If the income was from a Form 1099, you should consider filing. This is especially true if it was a 1099-MISC because taxes owed for miscellaneous income from self-employment means you are responsible for paying your own federal, Social Security and Medicare taxes. But like the W-2 example, your standard deduction would most likely negate any taxes you might owe. In other words, if you didn't out-earn this deduction, you aren't going to owe any taxes.
Was Federal Income Tax Withheld?
Just because you don't have to file doesn't mean filing would not be in your best interest. With thousands of dollars in tax credits and deductions available, you could still end up with a refund And if you had taxes withheld from your income, you can file to have that amount refunded to you. For instance, if you earned $1,000 last year and you're in the 10 percent tax bracket, you paid roughly $100 in taxes. After your exemption and other deductions and credits are applied, your tax obligation could be $0. In that case, you are entitled to a $100 refund of the taxes you paid.
Times You Are Required to File
There are times in which you are required to file taxes regardless of the amount earned. For example, if you worked a job and your employer did not withhold Medicare or Social Security taxes, you have to file a return so those taxes can be collected. Also, if you had a Health Savings account that was created with pre-tax dollars, you are required to file a return on that money, as well. In these cases, rules for how much money you can make without filing taxes don't apply.
Your Employer Is Tax Exempt, You Aren't
Let's say you worked for a tax-exempt organization such as a church. Although the organization itself is exempt from paying into Medicare and Social Security, you are not; if you made more than $108.28 in earnings, you have to file a return to declare that income.
But the most common situation in which a person is required to file a tax return on an amount less than $1,000 is if the person was self-employed. If you earned more than $600 in self-employment income in the previous year, then you have to file a tax return to declare those earnings. Again, you most likely won't owe because of exemptions, but it is best to file just in case since the client who paid you also filed your 1099-MISC form with the IRS.
Other 1099s That Might Require Filing
If you had unearned income from other sources, such a dividend payment, withdrawal from a retirement account or lottery winnings, you have to file a tax return to declare that income. If you don't know whether you are required to file a tax return on this income, contact a tax professional for guidance.
K.A. Francis has been a freelance and small business owner for 20 years. She has been writing about personal finance and budgeting since 2008. She taught Accounting, Management, Marketing and Business Law at WV Business College and Belmont College and holds a BA and an MAED in Education and Training.