No one really enjoys filing their own taxes, which is why people are relieved when they discover they aren't required to file. But with the recent tax changes, it might be a good idea to at least prepare a tax return to check if you owe taxes or if you are due a refund.
Although you are not required to file a tax return if your income is below the minimum filing threshold, you may still wish to consider completing your paperwork. If you have paid any tax during the year, or if you are eligible for credits and deductions, you couldd receive a refund check.
Avoid a Failure to File Penalty
Just because you aren't going to get anything back or you don't owe anything doesn't mean you don't have to file taxes. The Internal Revenue Service expects you to send in a tax return if your income is more than a set threshold and, if you don't, you could be subject to penalties. It's usually a good idea anyway since the best way to be sure that you don't owe anything or aren't owed anything is to do your taxes. By doing this, you avoid missing the deadline to pay taxes of you do owe, and you won't incur a failure to file penalty.
Filing Rules for Dependents
If you are still dependent on your parents for support, the filing thresholds for income taxes are relatively low. Generally, you are considered a dependent if you are under 19 a full-time student under 24, but the best way to be sure is to ask your parents if they claim you as a dependent. If you are a dependent, you have to file a return if you make more than $1,050 in unearned income like interest or dividends. If your earned income is more than the standard deduction of $6,350 for the 2017 tax year, you have to file a return. If you don't have a job and only make income from money you have saved, your parents might also choose to put your income on their return, saving you from having to file for yourself.
For the 2018 tax year, if you earned less than the standard deduction, you don't have to file. If you have unearned income it is taxed based on the trust and estates tax bracket. But like previous years, you parents could opt to put your income on their return so you wouldn't have to file.
Filing for Non-Dependents
When you aren't a dependent, you have to file if you make more in gross income than the sum of your standard deduction and the personal exemptions you'd claim as a result of your filing status. For instance, if you are single, you'd claim a $6,350 standard deduction and $4,050 personal exemption, for the 2017 tax year, so if your income is $10,400 or less, you won't have to file. If you are married and file a joint return, you don't have to send one in unless you and your spouse make more than $20,800, since you get two $4,050 exemptions and a $12,700 standard deduction.
For the 2018 tax season, the personal exemption has been eliminated until after 2025. If you earn more than your standard deduction, you are required to file, provided you cannot be claimed as a dependent by someone else. For married couples who file joint returns, the standard deduction is $24,000, single and married filers who file separately get $12,000 and those who file head of household can claim $18,000.
Other Reasons to File
The biggest reason to file is that you could be entitled to get something back. For instance, if your only income was a summer job at which you made $5,000, and your employer took taxes out, the IRS could owe you a refund. The only way to get your money is to file. You also have to file if you have certain special types of income. If you made more than $400 mowing lawns over the summer after paying for gas for your mower, you have enough self-employment income that you have to file. Another reason to file could be if you got tips from waiting tables that you didn't report to your boss.
If You Didn't File
If you didn't file your taxes and you needed to, you can fix the problem. The IRS gives up you up to three years to file back tax returns when it owes you money. There is no IRS late filing penalty if a refund is due. If you didn't file last year, you can file the return late this year, and, if the IRS owes you, you'll get a check without any penalties. After three years, the IRS keeps your money. When you owe the IRS and you didn't file when you needed to, you could be subject to interest and penalties for not filing. The sooner you file, the sooner the interest and penalties stop adding up.
- Internal Revenue Service: Publication 501
- Internal Revenue Service: Do I Need to File a Tax Return?
- Internal Revenue Service: Filing Past Due Tax Returns
- Internal Revenue Service: Publication 17 (2017), Your Federal Income Tax
- IRS. "Publication 501 Dependents, Standard Deduction, and Filing Information," Pages 2-5. Accessed March 20, 2020.
- Tax Foundation. "2019 Tax Brackets." Accessed March 20, 2020.
- IRS. "Filing Status," Page 7. Accessed March 20, 2020.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.